(The Center Square) – Hanover County is weighing a higher tax rate on data center equipment after removing its current rate from the latest budget.
Officials are reassessing how to generate revenue from a growing pipeline of projects.
County leaders are considering increasing the tax set at 45 cents per $100 of assessed value to as much as $3 per $100. The tax applies to computer equipment inside data centers, meaning it would be paid by operators rather than residents.
The potential change would represent a significant shift from the rate established in 2023 to attract data center development and remains well below the county’s standard business personal property tax rate of $3.57.
The Board of Supervisors removed the existing rate during its April 8 adoption of the fiscal year 2027 budget “in order to reevaluate it,” according to a statement provided to The Center Square by Hanover County.
“As with all policies and fees set by the Board of Supervisors, the board believes it is appropriate to take a fresh look at those fees to ensure they reflect current conditions and service impacts to the locality,” the county said.
The move did not eliminate the data center equipment tax entirely. Instead, the county removed the rate from the budget while it gathers information and compares its approach with other localities before setting a new rate.
Hanover has not collected any revenue from the data center equipment tax and has not developed revenue estimates under different rates, the county told The Center Square.
The review comes as data center development continues to expand in the county.
Hanover does not have data centers generating revenue under the equipment tax, but several large projects are in various stages of development or review.
The largest is a 1,200-acre data center campus near Ashland in the Beaverdam District. The development, approved by the Board of Supervisors in 2024, could include about 30 buildings and is projected to generate an estimated $1.78 billion in tax revenue over 20 years, according to the county.
Additional projects under consideration include a 427-acre data center proposal along Mountain Road that has received a favorable recommendation from the planning commission, a roughly 200-acre proposal from LS Power along Old Ridge Road, and a smaller project proposed near the I-95 and Route 54 interchange.
A separate 400-acre proposal at the former Hunting Hawk Golf Club site was withdrawn earlier this year after the planning commission declined to recommend it.
The decision will shape how much revenue Hanover collects from future data center development.
The Board of Supervisors is expected to take up the issue at its June 24 meeting.
