Virginia Democrats Propose Ending Data Center Tax Exemption

Senate budget would scrap tax cuts from former GOP governor's proposal

Published on Feb. 23, 2026

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The Democratic-controlled Virginia General Assembly has unveiled its budget proposal, which would largely undo tax cuts prioritized by former Republican Governor Glenn Youngkin in favor of increased spending to address federal reductions to social programs.

Why it matters

This budget battle reflects the political divide in Virginia, with Democrats seeking to roll back business-friendly policies of the previous administration in favor of more social spending. The fate of the data center tax exemption, a major incentive for tech companies, will be a key point of contention.

The details

The Democratic budget proposal would end a tax exemption for data centers, a major industry incentive championed by Youngkin. The legislature's money committees presented their respective budget plans, setting up negotiations between the Senate's Democratic majority and the Republican-controlled House of Delegates.

  • The General Assembly unveiled its budget proposal on February 23, 2026.

The players

Glenn Youngkin

The former Republican governor of Virginia who prioritized tax cuts in his last budget proposal.

Virginia General Assembly

The state legislature, with a Democratic-controlled Senate and Republican-controlled House of Delegates, that is negotiating the state's budget.

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What’s next

The House and Senate will now negotiate a final budget proposal, with the fate of the data center tax exemption being a key point of contention.

The takeaway

This budget battle reflects the ongoing political divide in Virginia, with Democrats seeking to roll back business-friendly policies of the previous Republican administration in favor of increased social spending.