
Seven South Carolina data center companies received $828 million in sales tax breaks on their technology and energy purchases last year. An attempt to block the incentives failed in the state Senate on Thursday, April 23, 2026. The above is a rendering of the $800 million data center under construction in Aiken County by Facebook parent company Meta. (Illustration courtesy of Meta)
COLUMBIA — Six years ago, there was no data center in South Carolina taking advantage of sales tax exemptions the state offers on the vast number of computers, servers, hardware and software purchased for these windowless facilities that power everything from artificial intelligence to high-speed financial trades.
Nor did any data center receive a reprieve from taxes on their monthly energy bills. It’s a benefit that could add up quickly, given the largest of these centers, known as “hyperscalers,” can consume upwards of 200 megawatts.
By last year, it was a very different story.
For seven companies, those sales tax breaks provided by state law tallied an estimated $828 million for the fiscal year that ended last June, according to data from the state’s fiscal analysts.
The whopping number was revealed during this week’s Senate budget debate, as Sen. Chip Campsen unsuccessfully sought a one-year suspension. He argued that giant corporations are getting benefits not provided to South Carolina residents, who senators referred to as “Fred and Ethel” — names for a couple borrowed from the 1950s TV show “I Love Lucy.”
“They don’t get any exemption, yet we’re giving it to the wealthiest (companies) in the history of the world,” the Isle of Palms Republican said.
“Fred and Ethel could use that money a lot better,” Campsen added.
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South Carolinians have long been exempted from paying sales taxes on their home electricity. Legislators extended that exemption to “technology intensive” facilities in 2006.
Six years later, they passed a law specifically exempting qualifying data centers from sales taxes on all electricity, as well as computers, related equipment and software used by the facility.
But no company claimed those breaks until the 2021-22 fiscal year, when they totaled less than $8 million. In four years, that escalated to $828 million, according to the state Revenue and Fiscal Affairs Office. It didn’t break down how much is attributable to the electricity exemption versus computer purchases.
To qualify for the breaks, a data center owner must invest at least $50 million over a five-year period and employ at least 25 full-time workers.
The company also must pay wages worth 150% of the per capita income in the county where it is located.
In Berkeley County, home to tech giant Google’s inaugural data center in the state, that amounts to an annual salary of $87,600.
In Aiken County, where Meta is building, it’s more than $85,000.
And in Colleton County, where a proposed gigawatt data center has since stalled, it’s about $74,000.
Unable to get agreement on a one-year hiatus of the sales tax breaks, Campsen managed to get a reporting requirement inserted in the state budget. Under the approved clause, the Department of Revenue must report the total worth of the tax breaks to the Legislature’s chief budget writers in the House and Senate.
South Carolina is among 14 states not disclosing revenue lost to data center tax breaks, according to a report released earlier this month by Good Jobs First, a watchdog group that focuses on economic development incentives.
“This is an industry that has descended upon the entire country,” Campsen said. “We are playing catchup. We are behind the eight ball. And this isn’t just South Carolina. Every state is struggling with this.”
Data center development has become mired in controversy in town halls across the country, even as President Donald Trump deemed them “key” to beating out adversaries, such as China, in the artificial intelligence race.
As public sentiment has turned against these energy-gobbling centers heading into the midterm elections, the president has pushed companies to sign a voluntary pledge to cover the cost of building out the power they require.
According to the research firm Data Center Watch, local opposition held up or blocked at least $156 billion worth of investment across 48 projects in the second half of 2025.
In South Carolina, residents of Spartanburg and Colleton counties have battled back two such data center proposals.
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‘Pulling the rug out’
Still, Sen. Sean Bennett balked at the prospect of yanking sales tax incentives for one, specific industry, adding that it wasn’t fair to companies with centers under construction in the state or considering a location here.
“We’re pulling the rug out from underneath them,” the Summerville Republican argued.
“There is no reason to subsidize a multitrillion-dollar company with sales tax exemptions,” Campsen responded.
“In the 11th hour, we’re changing the rules,” Bennett shot back.
“It’s the only hour I have left,” Campsen volleyed, as legislation aimed at regulating these centers has stalled in Senate committees with just nine days left on the legislative calendar.
Sen. Michael Johnson also chimed in that ending the tax breaks could impact not just the developers of data centers but other industry that has its own private computing facilities.
“Lockheed Martin is going to be affected by this. Comcast, Charter, Blue Cross Blue Shield. All of these companies are saying, ‘We will be directly impacted by this,’” the Tega Cay Republican said.
“These are major employers in our state,” Johnson added. “We’re changing the business rules on existing companies. Businesses just want predictability.”
Beyond the impact to the companies, Sen. JD Chaplin pointed to the property tax revenue these centers bring to South Carolina’s rural corners.
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“It’s the people from the wealthier parts of the state that seem to be against data centers, while it’s the much poorer regions of the state that stand to benefit the most from them,” the Darlington Republican said.
“If we had $828 million to spend, we’d be spending a lot of that in the rural areas,” Campsen responded. “You’d get a lot more bang for your buck than giving a sales tax exemption to a data center.”
Other issues
Sen. Josh Kimbrell, R-Boiling Springs, pointed to the recently defeated Spartanburg County data center proposal, saying it would have generated between $60 million and $70 million in annual property taxes, even after the county offered the company a discount on its rates.
Now activists have turned their attention against a different $2.8 billion data center in the Upstate county — this one already approved for an incentive package that allows it to buy down its tax bill to a maximum of $2 million annually for each year of the 40-year deal.
Unlike other data centers in the state, this company, Valara, pledged to generate its own electricity. But to do so, it now wants to add 11 natural gas turbines, capable of generating about 400 megawatts total, to its previously permitted fleet of 24 natural gas-powered generators — a ninefold increase in power capacity.
State environmental regulators still need to review the company’s application before deciding whether to grant its latest request.
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Sen. Shane Martin, R-Pauline, unsuccessfully attempted to add a rule to the state budget to prevent what he called a “bait-and-switch” tactic.
While the Valara and sales tax repeal efforts failed, the Senate did add requirements to the budget that data centers using more than 3 million gallons of water a month report usage to the state’s environmental regulators or face a $10,000 per day penalty.
The Senate also barred data centers from other state level economic development incentives, though the state Commerce Department has largely steered clear of data center recruitment.
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