5 minPolitics
West Virginia ties AI data center revenue to state income tax elimination
Gov. Patrick Morrisey unveiled a seven-point plan to use revenue from hyperscale data centers to reduce and eventually eliminate West Virginia's personal income tax, while directing funds to counties and infrastructure.
West Virginia leaders are moving to tie the state's economic future to the artificial intelligence boom, with Gov. Patrick Morrisey unveiling a plan that would dedicate half of all revenue from approved hyperscale data center projects to reducing and eventually eliminating the state personal income tax.
The seven-point plan, developed with lawmakers, marks an escalation in the national debate over data centers. States are competing for billions in investment and new jobs, while communities increasingly raise concerns about utility costs, water use and local control. The facilities needed to power AI are also driving electricity demand higher, putting new pressure on power grids across the country.
Under the plan, 50% of revenue generated by projects approved through Charleston's High Impact Data Center Designation process would go directly to tax relief, with none of that money entering the state general fund. Counties hosting data centers would receive 30% of the revenue for schools and local government, 10% would be distributed to all 55 counties, and another 10% would fund infrastructure upgrades, including public water systems.
«Today, as the world stands on the cusp of a new digital and economic frontier, West Virginia is stepping forward once again to lead, not by repeating the mistakes of other states, but by implementing a proactive, 20-year development strategy on our terms,» Morrisey said in a statement.
«This shared framework gives us the exact blueprint we need to attract billions in private investment, create thousands of high-paying construction and technology jobs, lower taxes for our citizens, and revitalize economically distressed regions, all while preserving the wild and wonderful state we call home,» he added.
The plan builds on a 2025 state law that established the designation process. West Virginia House Speaker Roger Hanshaw has supported data center development, with a spokesperson saying the plan echoes what the legislature enacted.
Water infrastructure has become a flashpoint across parts of southern West Virginia that have struggled since the coal industry's decline. The bipartisan bill underpinning the governor's plan also sought to protect utility customers from added costs, a major concern across the Eastern Panhandle, which borders the Washington, D.C. metro area.
Resistance is growing in that region. «No Data Centers» signs are becoming common along roads in Jefferson and Berkeley counties and neighboring Clarke County, Virginia, as residents point to nearby Loudoun County, Virginia, where sprawling data center development has increasingly pushed up against residential subdivisions and commercial centers.
«We are a cautionary tale for the rest of the country,» Rep. Suhas Subramanyam, D-Va., of Ashburn said in recent remarks critical of the data center explosion. «[I]f my district were a country, it would have more data centers than almost every other country in the world.»
Some West Virginia lawmakers are pushing for additional safeguards. House Minority Leader Sean Hornbuckle, D-Huntington, was listed as a sponsor of the 2025 bill that helped set the plan in motion but recently said the law should be amended to allow some local control over data center development.
«We are not going to allow a hostile takeover in our communities. It's not going to happen on our watch,» Hornbuckle said in June, according to the Steubenville Herald-Star. «We all know what House Bill 2014 did, and it's setting a very dangerous precedent in the state of West Virginia, [where] we all know we love our property rights.»
Morrisey emphasized that «all West Virginians must directly benefit from data center revenue,» noting that «by statute, 50% of the proceeds … will be dedicated to directly reducing and ultimately eliminating the state income tax.» He called the arrangement «very powerful» and said it «is going to benefit many, many West Virginians.»
West Virginia income taxes have already been falling. Sen. Jim Justice, R-W.V., signed a record 21% cut while serving as governor, and Morrisey followed with another 5% reduction this year. The top marginal rate now stands at 4.58%.
