Over the past several months, Arizona and Illinois have taken headline-grabbing steps to pause incentives for new data center developments.
Arizona enacted a three-year moratorium on new certifications under its Computer Data Center Program, while Illinois suspended new data center tax incentive agreements as state leaders reconsider how future growth should balance economic development with increasing demands on electric infrastructure, water resources, and local communities.
For many developers and corporate occupiers, the takeaway seemed straightforward: The incentives are gone. But that’s not the complete story.
DMA has confirmed with both the Arizona Commerce Authority and the Illinois Department of Commerce and Economic Opportunity that tenants occupying facilities that were certified before the moratorium remain eligible to apply for available benefits under those existing certifications, provided all program requirements are met.
For companies evaluating colocation, build-to-suit, or leased hyperscale space, that distinction could represent millions of dollars in potential tax savings.
What Changed
Both states have recently shifted their approach to data center incentives in response to growing concerns over:
- Electric grid capacity
- Rising energy demand
- Water consumption
- Long-term taxpayer value of incentive programs
Arizona’s budget legislation paused new certifications through June 30, 2029, while Illinois has suspended the execution of new incentive agreements as policymakers evaluate broader reforms to the state’s data center incentive framework.
These actions primarily affect new projects seeking certification after the effective dates of the moratoriums.
What Didn’t Change
One important element remains intact: Facilities that received certification before the moratorium took effect continue to retain that certification.
After discussions with program administrators in both states, DMA confirmed that tenants locating within these previously certified facilities may still be eligible to obtain the applicable incentive benefits associated with those certifications, assuming all statutory and administrative requirements are satisfied.
That means a tenant leasing space in the right facility may still realize significant sales and use tax savings—even though no new facilities are currently being certified.
Why This Matters for Data Center Tenants
For many enterprise users, AI companies, cloud providers, and hyperscale customers, site selection increasingly revolves around speed to market.
Leasing space in an existing certified facility often provides:
- Faster occupancy timelines
- Lower development risk
- Access to infrastructure already under construction
- Potential access to incentive benefits that many assume are no longer available
As new certifications remain paused, previously certified campuses may become increasingly valuable because they offer both immediate capacity and continued eligibility for incentive programs. For tenants comparing multiple markets or competing facilities, this can materially change the economics of a project.
A New Layer of Due Diligence
The recent legislative changes also reinforce an important lesson for both developers and occupiers: A state’s incentive policy may change overnight, but the status of an individual facility matters just as much as the legislation itself.
Rather than assuming incentives are available—or unavailable—companies should verify:
- Whether the facility has an active certification
- Which incentives remain available to tenants
- Any timing or application requirements
- Documentation necessary to preserve eligibility
Answers to these questions can significantly affect project costs, procurement planning, and long-term operating expenses.
The Bottom Line
Arizona and Illinois may have paused incentives for new data center certifications, but they have not eliminated every opportunity. For tenants considering previously certified facilities, meaningful tax incentives may still be available—even in states widely viewed as having closed the door on new incentive programs. Understanding the certification status of a facility has become just as important as understanding the legislation itself.
Evaluating Data Center Locations?
Recent legislative changes don’t always tell the whole story. DMA helps data center developers and tenants identify remaining incentive opportunities, verify facility eligibility, and incorporate tax considerations into site selection decisions before commitments are made.
Before making any decision or taking any action based upon information contained on this website, you should consult with a DMA professional.