(The Center Square) – Only 30% of Georgia’s data center boom can be attributed to 2018 tax break intended to support the industry, according to a report released Wednesday from the State Department of Audits and Accounts.
The report, conducted by the University of Georgia’s Carl Vinson Institute of Government, contrasts with its previously released study and is expected to continue a debate over whether data centers should be publicly incentivized to power the increasing needs of artificial intelligence and other computing demands.
Seventy percent of Georgia’s data centers would have been constructed even without the sales and use tax exemption approved by state lawmakers, the report said. The university’s 2022 study had estimated 90% of data center activity was because of the tax break.
Researchers said their previous report did not have all the information required for an accurate analysis. They said they did not use data from the Georgia Department of Revenue because “too few taxpayers had utilized the Georgia data center exemption to meet the IRS threshold for aggregation that is necessary to allow for publication of data.” Researchers said they instead relied on data center websites, press releases announcing new projects and industry representatives for the information.
In 2024, state lawmakers scrutinized the tax break and began requiring auditors to study how all incentives affect state revenues and their returns on investment. A bill that would have paused the data center tax incentives was vetoed by Gov. Brian Kemp, who said it would undermine investments in projects already being developed.
In fiscal year 2025, Georgia lost $472 million in revenue because of data center tax breaks, the university’s report said. Still, the state’s overall economic growth outpaced the loss, according to the report.
The incentive “resulted in 28,350 jobs and $3.4 billion value added to the state economy due to construction, as well as 5,471 jobs and $823 million in value to the state economy for data center operations,” the report said.
Georgia has 166 data centers, the most of any surrounding state, according to Data Center Map, which has tracked the industry since 2007. Florida has 128 data centers, followed by North Carolina at 111.
While data centers can provide economic benefits, including giving Georgia a strong position in the national digital and AI economy, there are risks with the amount of electricity the centers require and the project pipeline, according to researchers.
“Forecasts of more than 8,000 [megawatts] of new demand have prompted concerns about potentially inflated projections, higher customer rates if infrastructure is overbuilt, and rising environmental impacts, since most near-term generation needed to serve data centers is expected to come from fossil fuels,” the report said.
Additionally, the state could be left with “overbuilt generation capacity and long-term financial obligations that must be recovered from ratepayers” if developers’ interest does not result in commitments, the report said.
The concerns have led to action. The state Department of Community Affairs paused reviews of data centers in July. In November, the department recommended regional reviews for facilities larger than 300,000 square feet in the metro Atlanta area and those larger than 500,000 square feet in rural areas. Final decisions remain with cities and counties.
The Georgia Public Service Commission approved a plan from Georgia Power on Dec. 19 that allows the utility to add nearly 10,000 megawatts of power by offsetting costs to ratepayers with revenue from large-load customers, including data centers.
