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Senators seek to block data centers from Opportunity Zone tax breaks

Reported · Written up by our desk · Industry

Bisnow reports that as public sentiment has turned against data center development, some U.S. senators are pushing to prevent certain data centers from qualifying for Opportunity Zone tax incentives.

The outlet says opposition is tied to concerns about data centers’ role in artificial intelligence expansion and the associated jump in utility costs and power demand, while data center developers and some rural officials continue to plan projects using the incentives for jobs and tax revenue.

Bisnow adds that the Opportunity Zone program, now in its second iteration called OZ 2.0, is designed to direct development to rural areas in economic decline, including a tax break known as a step-up in basis to reduce taxable gains after an investor holds an asset through a deferral period.

The article notes that OZ 2.0 offers a 10% step-up in basis for urban parcels, and that lawmakers involved in the program are now looking to block data centers from receiving the tax breaks.

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