Pennsylvania enacted a state tax break for data centers during the pandemic when those enterprises were just a glimmer on the horizon.

The 2021 state Fiscal Code provides a 6% sales tax exemption on equipment purchased by data centers. This includes servers which process and store data.

It’s designed to attract data center investment in Pennsylvania as it competes with other states.

Five years later, with some 50 data center projects appearing across Pennsylvania, local citizen opponents are calling to repeal the tax break.

Three repeal measures are in the legislative hopper along with some other tax bills involving data centers.

The tax exemption will lead to the loss of an estimated $155 million in state tax revenue during this fiscal year.

State government estimates place the revenue loss at $188 million in Fiscal Year 2026-27 and more than $500 million by FY 2030-31.

A state Revenue Department report lists 13 beneficiaries of the tax exemption in 2025, including Amazon Data Services and Iron Mountain Data Centers. The report doesn’t provide the amount of tax exemptions.

Lawmakers usually consider tax code changes during the state budget debate. But there are no signs that changes to the data center tax exemption are getting consideration.

Rep. Greg Vitali, D-Dela­ware, thinks the exemption has served its purpose and is no longer needed.

He sponsored House Bill 2198 with some Democratic cosponsors to repeal the exemption immediately.

The bill is before the House Finance Committee. Vitali lost a renomination bid Tuesday.

Sen. Jarrett Coleman, R-Lehigh, and Rep. Jamie Walsh, R-Luzerne, are drafting similar bills to repeal the data center exemption and redirect anticipated revenue savings for the purpose of reducing the state gasoline tax.

The state Oil Company Franchise Tax adds 58 cents to the cost of a gallon of gas, they said.

Other bills

Rep. Jeff Olsommer, R-Wayne, sponsored House Bill 2153 providing that any increase in local property tax revenue tied to a datacenter goes for tax relief for property owners.

HB2153 would distribute the revenue through the existing homestead/farmstead property tax exclusion.

The bill provides that while data centers may place demands on a community, the financial benefits are shared with the community, said Olsommer.

Sen. Tim Kearney, D-Delaware, sponsored Senate Bill 1297 amending the existing data center tax break.

SB1297 requires data centers to buy 100% of their energy from alternate energy sources and invest in energy efficiency to qualify for the exemption.