Virginia's 2026 budget created a temporary electricity-consumption tax for data centers that meet the budget item's definitions. The controlling record sets a rate of $0.011 per kilowatt-hour for electricity consumed from July 1, 2026 through June 30, 2028, and it covers both electricity supplied through a utility or other provider and qualifying self-supplied generation. The record establishes a tax and an administrative mechanism. It does not establish how much electricity a particular facility actually consumed, whether a named facility owes a particular dollar amount, or what environmental or grid impact followed from that consumption.
What the 2026 budget item imposes
Item 3-5.24 of Virginia's enrolled 2026 Special Session I budget imposes an electricity consumption tax of $0.011 per kilowatt-hour on data center operators covered by the item's definitions. The tax applies to electricity consumed at each covered data center beginning July 1, 2026 and before July 1, 2028. It is imposed in addition to other taxes and fees already applicable under Virginia law.
The statutory definition matters. The item defines a data center by its primary function and by specified computing, networking, power-management and cooling infrastructure, including equipment used to manage at least one megawatt of electrical power and cooling capacity. It also defines who counts as the data center operator for tax purposes. Those definitions control the tax obligation; the mere use of the phrase 'data center' in a zoning application, news article or utility filing does not by itself establish tax status.
Sources for this sectionVirginia budget Item 3-5.24 ↗
Utility-delivered electricity and self-supplied electricity follow different collection paths
For electricity delivered through an incumbent electric utility, electric cooperative or competitive service provider, the budget item assigns collection through the provider. The State Corporation Commission's current tax guidance says the provider of billing services bills the data center electricity consumption tax and remits the collected amount through the public-service-tax process.
Self-supplied electricity is treated separately. The budget item defines self-supplied power and requires the operator responsible for that generation to pay the tax on the electricity used at the data center. The SCC says operators using self-supplied electricity must report and remit the tax directly each month. The budget item also requires self-supplied usage to be reported quarterly to the Department of Environmental Quality, which verifies the usage with the Commission. That reporting chain is evidence of the tax-administration method, not evidence that a particular backup generator or onsite plant actually operated during a specific event.
Sources for this sectionVirginia budget Item 3-5.24 ↗Virginia SCC taxes and fees - Data Center Electricity Consumption Tax ↗
What the SCC requires for administration
The SCC's current public guidance says covered operators were required to submit a Data Center Operator Registration Form by September 1, 2026. New data centers approaching initial operation are instructed to register at least 30 days before the first electricity billing or 30 days before self-supplied generation begins. The SCC also publishes a Data Center Electricity Consumption Tax Monthly Report for self-supplied electricity.
The budget item states that the first collection was to occur in September 2026 and cover taxes owed from July 1, 2026 through September 1, 2026, after which the ordinary monthly collection structure applies. These dates describe administrative implementation. A registration filing, billing line item or monthly report can support a tax-administration statement, but it should not be converted into a claim about facility construction status, server utilization or hourly electric demand without the underlying operating record.
Sources for this sectionVirginia SCC taxes and fees ↗Virginia SCC public taxation forms ↗Virginia budget Item 3-5.24 ↗
The $600 million provision is a revenue cap, not a forecast
Item 3-5.24 says that in any fiscal year no more than $600 million of revenue from this tax may be deposited into Virginia's general fund. Revenue above that amount, after SCC administrative costs, is placed in a special nonreverting fund for refunds. Beginning with fiscal years on and after July 1, 2027, refunds from prior-year excess collections are allocated to data center operators according to their pro rata share of collections.
The $600 million number therefore describes how receipts are handled if collections exceed that level. It is not, by itself, an estimate that Virginia expects to collect $600 million, evidence that the tax has already produced that amount, or a measure of data-center electricity consumption. Actual collections would require SCC revenue records or another official accounting source.
Sources for this sectionVirginia budget Item 3-5.24, subsections C-D ↗
Status as of October 24, 2026
As of October 24, 2026, the statutory tax window has begun and the SCC's public taxation pages provide operator-registration, monthly-reporting and collection instructions. The SCC continues to describe the tax as applying from July 1, 2026 until before July 1, 2028. The budget language authorizes the Commission to issue additional rules and guidelines needed to administer the item.
The temporary end date is part of the controlling record. Unless later legislation changes the law, this budget provision should not be described as a permanent data-center electricity tax. A later budget act, statutory amendment or court or administrative action could change the framework, so future reporting should use the then-current controlling record.
Sources for this sectionVirginia SCC taxes and fees ↗Virginia budget Item 3-5.24 ↗
What this record does not establish
The tax record does not establish the actual electricity consumption of a named facility unless a facility-specific return, bill or verified usage record is available. The $0.011 rate cannot be multiplied by an announced megawatt capacity, a utility service request or a planning forecast and presented as an actual tax bill. Nameplate capacity, contracted capacity and modeled demand are different evidence categories from measured kilowatt-hours.
The record also does not establish generator runtime, emissions, air-quality exposure, water consumption, grid reliability effects, profitability or legal noncompliance at a specific data center. Tax liability and environmental permitting answer different questions. Likewise, the existence of a tax does not establish whether Virginia's broader data-center tax policy is economically beneficial or harmful; those conclusions require fiscal, economic and policy evidence beyond the collection provision itself.
- A tax rate is not an electricity-usage measurement.
- The $600 million cap is not a revenue forecast.
- Self-supplied tax coverage does not prove generator operation at a particular time.
- Tax administration does not substitute for permits, meter data or emissions records.
What additional record would support a stronger claim
A facility-level tax calculation would require measured kilowatt-hours for the applicable month together with evidence that the facility and operator fall within the controlling definitions. Utility-delivered electricity could be supported by billing or provider reporting records. Self-supplied electricity would require the operator's monthly return and the usage records used for the DEQ-SCC verification process.
A statewide revenue claim would require actual SCC collection data, including refunds and administrative treatment where relevant. An environmental claim would require the corresponding air permit, generator operating record, emissions report, water record or monitoring data. Keeping those layers separate preserves the central evidence boundary: the tax record establishes a fiscal obligation and collection system, not every downstream fact that might be inferred from electricity use.
Sources for this sectionVirginia SCC public taxation forms ↗Virginia SCC taxes and fees ↗
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