West Virginia bets on data centers to kill its income tax

West Virginia is trying to turn the hyperscale data center boom into a personal income tax cut, and eventually, no state income tax at all. Gov. Patrick Morrisey this month rolled out a 20-year framework built around a 2025 law that hands local governments little power to block these projects, in exchange for routing the tax revenue back to residents.

The revenue split

Fifty percent of all revenue generated by hyperscale projects will go toward reducing or eliminating the state’s income tax. The plan will give counties 30 percent of the revenue of any project within their jurisdiction, with an additional 10 percent shared by all counties in the state. The remaining 10 percent will be used for improved electrical, water, and wastewater projects.

None would enter the general revenue fund. That is the political sell: every dollar the hyperscalers pay flows to either taxpayers, counties, or infrastructure, not the general budget.

Why the state has the leverage

Under West Virginia’s Power Generation and Consumption Act, passed in 2025, local governments have little regulatory authority to block large technological infrastructure projects such as hyperscale data centers. That is a meaningful contrast to the permitting fights slowing down projects in Virginia, Georgia, and Texas.

The plan holds data center developers and utilities responsible for covering electrical infrastructure upgrades and energy capacity needs. It also requires them to build, bring, or procure sufficient power resources needed for their projects. In other words, hyperscalers eat their own power bill.

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The pushback

Del. Chuck Horst, R-Berkeley, said he was concerned that data centers provide few jobs, so giving them a tax break makes them less economically valuable to the state. What is attractive about them is simply the amount of revenue they generate for the state, Horst said. And I have concerns that we’re going to give them tax breaks on that revenue, so we reduce the amount that the state would receive.

Local opposition is also brewing. Provisions were likely written with Tucker County residents in mind, many of whom have opposed Fundamental Data LLC’s proposal to develop the state’s first hyperscale data center there.

What it means for the AI buildout

West Virginia is pitching itself as a permit-light, power-friendly alternative for hyperscalers running out of grid capacity in Northern Virginia. If the plan works, expect more site announcements from the usual cloud and AI operators, plus follow-on demand for power and cooling vendors. For more, check other news on the AI infrastructure race.

Options market and stocks to watch

Watch for reaction across the hyperscaler, power, and cooling names most exposed to new data center siting decisions:

• MSFT: watch for any site-selection commentary tied to lower-friction states like West Virginia.
• AMZN: AWS capacity expansion is the biggest swing factor for state-level data center revenue projections.
• GOOGL: watch for cloud capex language and regional buildout mentions.
• VST and CEG: independent power producers benefit if developers must procure their own generation.
• VRT: cooling and power infrastructure demand scales with every new hyperscale site.

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