Illinois Governor Pritzker to Call for Two-Year Suspension of Data Center Tax Incentives – Report

Why It Matters

The pause could reshape Illinois’ competitive advantage in attracting data‑center projects while protecting consumers from rising energy costs. It signals heightened regulatory scrutiny of high‑energy industries nationwide.

Key Takeaways

• Two‑year pause on Illinois data‑center tax breaks.
• Incentives cover up to 20 years of tax exemptions.
• 28 applications submitted 2019‑2024, 27 approved.
• Governor seeks grid impact study before new incentives.
• Chicago vacancy low, but power delays persist.

Pulse Analysis

Illinois’ data‑center boom has been fueled by generous tax abatements that waive multiple state and local taxes for up to two decades. The incentives, designed to attract $250 million investments and create high‑paying jobs, have drawn major players such as Equinix, Microsoft, and Digital Realty. While the policy has bolstered Chicago’s status as a top U.S. data‑center market, critics argue that the rapid expansion strains the regional power grid and could push residential electricity rates higher.

Governor J.B. Pritzker’s proposed two‑year suspension reflects growing concern that data centers are not contributing their fair share to the energy infrastructure they heavily rely on. By mandating a comprehensive study of existing facilities’ impact on the grid and consumer bills, the administration aims to quantify hidden costs and inform future fiscal policy. This approach aligns with a broader national trend where policymakers scrutinize high‑energy industries for hidden externalities, balancing economic development with sustainability and consumer protection.

For developers, the suspension introduces uncertainty but also an opportunity to demonstrate energy efficiency and grid‑friendly practices. Companies may need to negotiate alternative financing or accelerate sustainability certifications to qualify for future incentives. Meanwhile, Illinois risks losing some of its competitive edge to neighboring states with more predictable tax regimes. The outcome of the legislative review will likely set a precedent for how states manage the trade‑off between attracting high‑tech infrastructure and safeguarding the broader public interest.

Illinois governor Pritzker to call for two-year suspension of data center tax incentives – report

Gov wants data centers to ‘pay their fair share’ when it comes to energy investments · February 18 2026 • Dan Swinhoe

Governor JB Pritzker is reportedly set to call for a pause on data‑center tax incentives in Illinois while the state evaluates the impact of the sector on the local energy grid and bills.

NBC reports Pritzker will this week call for a two‑year suspension of tax incentives offered to develop data centers amid growing scrutiny over rapid sector growth and fears over the impact on local communities.

Image 1: Chicago – Thinkstock / marchello74

Illinois currently provides tax abatements for facilities that hit certain investment and employment thresholds. Qualifying facilities must invest $250 million over a 60‑month period and create at least 20 high‑paying jobs. Facilities must also meet certain efficiency and sustainability standards.

Qualifying data centers are entitled to an exemption from the Retailers’ Occupation Tax Act, the Use Tax Act, the Service Use Tax Act, the Service Occupation Tax Act, all locally‑imposed retailers’ occupation taxes administered and collected by the Department of Revenue, and the Chicago non‑titled Use Tax for up to 20 years. Some facilities may also receive additional credit on construction wages if located in an underserved area.

According to the 2024 investment report, 28 applications were submitted between 2019 and 2024, with 27 granted. Companies with qualifying projects include Digital Realty, Stack, NTT, CoreSite, T5, Microsoft, QTS, Aligned, CyrusOne, Serverfarm, Equinix, Iron Mountain, and EdgeConneX.

Under the proposal, tax incentives would not be available for new data centers for two years, beginning in July 2026.

The suspension will reportedly form part of the governor’s State of the State and budget address this week, according to NBC.

Pritzker will instruct state agencies to study the impact of existing data centers on the state’s energy grid and consumers and analyze the financial impact the centers have had on the economy. He will look to ensure residential bill‑payers are protected from higher energy costs associated with building out new power generation and transmission infrastructure to serve data centers.

NBC notes that Illinois’ Democratic‑led General Assembly must approve Pritzker’s proposal.

Pritzker has previously said data centers should ‘pay their fair share and not impact people’s energy bills,’ and said Illinois would be looking at the issue in the spring legislature.

Chicago is one of the US’ major data‑center markets, with more than 1 GW of operational IT capacity, according to Cushman & Wakefield’s 2025 global data‑center market comparison. CBRE’s 2025 report suggests there is 691.7 MW of wholesale capacity within Chicago, with a vacancy rate of 2.4 percent, and some 243.6 MW of capacity under construction.

CBRE notes, however, that many new data‑center projects in the area being served by ComEd face power‑delivery delays until 2031 or later.