Energy Tax Benefits for Data Centers: In Brief

This Congressional Research Service brief examines how data center owners may benefit from federal tax credits and deductions aimed at increasing clean electricity supply or improving energy efficiency, including the investment tax credit (ITC), clean electricity investment tax credit (CEITC), production tax credit (PTC), and the Section 179D energy-efficient buildings deduction. It details how data centers indirectly benefit from tax incentives for nuclear, natural gas with carbon capture, and renewable energy facilities, and analyzes whether growing data center electricity demand could extend the lifetime of clean electricity tax credits by pushing back GHG emissions reduction targets. The report is useful for advocates tracking how federal tax policy subsidizes data center energy consumption and the climate implications of that growing demand.