Rural areas have been left out of the opportunity zone program since it began. That changes starting January 1, when the One Big Beautiful Bill Act expands the program to include rural census tracts. Data centers are already moving there fast, and now they can claim a federal tax break while doing it.
The program offers corporate tax benefits to projects sited in designated zones. The tax savings are real, and the requirements are simple: companies must invest capital in a qualified project through a specialized investment vehicle. Disclosure of the benefits is voluntary because the break is considered confidential IRS data.
Jason Smith’s Pitch
Ways and Means Committee chair Jason Smith made the pitch for rural data centers directly. He said the new rules “may significantly lower barriers for large-scale, capital-intensive projects in rural areas—most notably hyperscale data centers.” He also said “the economic case for building data centers in designated rural opportunity zones becomes far more compelling” with the new program.
Searchlight’s Research
Emily Kraschel, a tax policy analyst at the Searchlight Institute, reviewed databases of data center projects. She found more than 100 data centers under development in rural areas that could be eligible for the tax benefits. A conservative Searchlight database includes fewer than 700 data center projects planned or under construction; other datasets put the total closer to 1,500.
Pew research found 13 percent of operating data centers are in rural areas, but around 67 percent of planned facilities are going rural. The trend is clear: data centers are leaving urban cores for cheaper land and friendlier zoning.
The Backlash
The backlash against data centers—including from rural and GOP voters—is reaching a fever pitch. Amazon attempted to negotiate a lower tax bill on one of dozens of data centers it plans to open in Mississippi. Meta wrote off data center equipment under a federal tax break intended for research and experimentation, per The New York Times.
Hawley’s Legislation
Senator Josh Hawley is not convinced the program should apply to data centers at all. He introduced legislation to eliminate opportunity zone funding for data centers, saying it would help “ensure Big Tech companies don’t get tax breaks to build data centers on farmland.”
Corporate Denials
Microsoft, Meta, and Amazon all denied using the program when contacted by WIRED. The denials are corporate positioning, not settled fact.
- Microsoft’s general counsel of infrastructure legal affairs, Rima Alaily, said the company “does not use the opportunity zone program to invest in the purchase or construction of its data centers.”
- Amazon spokesperson Julia Lawless said the company “does not actively seek out” land in opportunity zones for development and has not claimed the tax benefit for its projects.
- Lawless added: “If we locate in one of these areas, it’s because our site selection criteria—from available land to access to talent—aligns with tracts that governments across all levels have previously identified for economic development; not because we utilized the OZ benefit. We have not used this program for our site selection and have no plans to add it to our criteria for our future decisionmaking process.”
- Google did not respond to WIRED’s request for comment.
The response pattern is consistent: companies deny using the program while building in rural zones anyway.
Kraschel’s Warning
Nathan Jensen, a government professor at the University of Texas-Austin, says he would be “very surprised” if some companies were not considering siting in rural opportunity zones. Jensen’s skepticism is shared by Kraschel, who notes the only requirement for benefits is capital investment. That does not guarantee job creation or local economic growth.
The program takes effect on January 1. Data center developers will start planning now. The fight over whether data centers should qualify at all is unresolved.
The Skeptics
Kraschel’s warning is worth remembering: capital investment does not guarantee job creation or local economic growth. A data center can anchor a rural tract without adding many jobs beyond construction. The tax savings flow to the company, not necessarily to the community.
What Comes Next
The program takes effect on January 1. Data center developers will start planning now. The fight over whether data centers should qualify at all is unresolved.
The program is a bet on rural America. Whether it pays off depends on who builds there and why. The companies that denied using the program may not be the ones who end up benefiting from it.
The fight over opportunity zones is not over. It is just getting started.
Where the paper stands
The paper backs rural data center projects taking advantage of the expanded opportunity zone program’s tax breaks, and is against any licensing regime that would force them into a compliance burden big tech companies alone could afford. The tax savings are real, and the requirements are simple, which makes the program worth watching closely as developers plan ahead.
The danger is big tech dominance, not the technology itself. When the biggest firms ask to be regulated, the paper asks who those rules would lock out: licensing regimes and compliance costs only giants can afford are a moat, not a safeguard. The paper backs narrow rules against direct harm, such as forcing companies to disclose safety failures they hid, and opposes broad rules that hand the market to the incumbents.
The fight over opportunity zones is not over. It is just getting started. The companies that denied using the program may not be the ones who end up benefiting from it. Watch for the compliance costs to come down first, before the moat closes behind them.
Source material: “Rural Data Centers Are in for a Big Federal Tax Break,” WIRED.
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