Land and data-center sites, North Carolina
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Data center tax revenue: what a North Carolina county keeps

A data center pays county property tax on its land, buildings, and equipment, and in two North Carolina counties one operator is the largest taxpayer. A county keeps less than the announced investment. State sales tax breaks on equipment remain, local grants can return part of the tax, and equipment value falls fast.

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Quick summary: This guide explains what a North Carolina county collects from a data center and what reduces it. It is for residents, landowners, and county officials who weigh a proposal’s tax promise. The key point: count the property tax the county actually keeps after grants and depreciation, not the investment figure in the announcement.

Data center tax incentives in North Carolina

North Carolina’s main data-center incentives are state sales tax exemptions on equipment and software. The retail sales and use tax statute exempts these items:

  • Eligible business property at an eligible internet datacenter, in subdivision (55).
  • Datacenter support equipment at a qualifying datacenter, in subdivision (55a). The list includes generators, transformers, uninterruptible power supply systems, batteries, chillers, cooling towers, servers, and network equipment.
  • Computer software sold to a datacenter operator for use within the datacenter, in subdivision (43a).

A facility must qualify for each exemption. The Department of Revenue’s notice summarizes the tests. An eligible internet datacenter needs a Commerce determination of at least 250 million dollars of private investment within five years. It must sit in a county with a qualifying development tier when it applies. A qualifying datacenter needs at least 75 million dollars of private investment within five years. It must also meet a wage standard set by the county’s tier and provide health insurance for full-time employees.

These are sales tax exemptions. They do not remove land, buildings, or equipment from the county property tax roll.

The 2026 electricity exemption repeal

North Carolina ended its sales tax exemption on electricity for datacenters in 2026. Session Law 2026-41 struck electricity from subdivisions (55) and (55a) and left the equipment exemptions in place. The Department of Revenue’s notice sets the effective date at July 7, 2026. The repeal applies from the first billing period that starts on or after August 6, 2026.

Electricity sold for use at a certified datacenter now carries the combined general sales tax rate. A purchaser must report the tax it paid each quarter, and the first report is due October 30, 2026. The repeal does not change the other datacenter exemptions.

What a data center pays the county

A data center pays county property tax on its land, its buildings, and its business personal property, such as electrical and computer equipment. In counties with large campuses, one operator can be the largest taxpayer.

County Fiscal year Largest taxpayer’s share of the county’s assessed value
Catawba 2025 4.70 percent
Caldwell 2025 7.63 percent
Caldwell 2015 8.53 percent

In Catawba, the county’s tax facts list a computer-services company first, with about 1.48 billion dollars of assessed value. Its economic development agreement with the county covers a data center in Maiden. In Caldwell, the county’s 2025 annual report lists first the operator of a data center in Lenoir. Its share fell between 2015 and 2025 even as its assessed value rose, because the rest of the tax base grew faster.

These shares cover each taxpayer’s whole property in the county. They are not the tax from one building, and they are not the tax after grants.

Local incentive grants

A county can return part of the property tax through incentive grants. The state’s local development statute lets a county spend money for economic development after a public hearing. Each agreement must state both sides’ duties. It must let the county recapture money if the company creates fewer jobs, invests less, or does not keep operations at the agreed level.

Catawba County’s minutes show how a grant can work. In 2014, the commissioners approved an amendment to a 2009 data-center agreement. It set annual grants equal to 50 percent of the added property tax on real property and 85 percent on personal property, for a ten-year initial term. That is a historical agreement. We did not verify current terms or payments.

Watch for: An announced investment is not a tax bill. Ask for the assessed value, the tax rate, the grant terms, and the years each grant runs.

Why gross investment is not net revenue

The investment figure in an announcement is not what a county collects. Four things separate them.

  1. Assessed value is not spending. The Caldwell operator reports investing more than 4 billion dollars in the region and state since 2007. Caldwell’s 2025 table assesses its property in the county at about 677 million dollars. One number counts spending in more than one place over many years. The other is current taxable value in one county.
  2. Equipment value falls fast. The state’s 2026 depreciation schedules, which the state recommends for valuing business personal property, give data processing equipment a five-year life. For that category, the schedule values equipment at 80 percent of trended cost after one year, 42 percent after three, and 5 percent after five.
  3. Grants return part of the tax. A local incentive agreement can pay back a share of the property tax each year.
  4. Public costs come off the revenue. The federal guide to regional multipliers states that its multipliers do not provide all the information a fiscal impact study needs. A fiscal study counts public services, infrastructure, and cash incentives against the revenue.

What Cost of Community Services studies show

A Cost of Community Services study compares what each land use pays a county with what it uses in county services. Wake County’s 2024 study found that, for each dollar of revenue, residential land used about 1.09 dollars in services. Commercial and industrial land used about 8 cents. Farm and forest land used about 24 cents.

The study states its own limits. It is a snapshot of existing finances, neither predictive nor speculative. It is not meant to compare one type of new development with another, and it does not single out data centers. A proposed campus needs its own fiscal analysis.

Take action: If a buyer has asked about your land, read the county’s tax and zoning record for the tract before you discuss price. Start with One parcel. Everything the record says, in order.

Who confirms what a county keeps

Each part of the answer has an owner.

  • Assessed value and the tax billed. The county tax office.
  • Principal taxpayers and collections. The county finance director’s annual report.
  • Grant terms and payments. The economic development agreement and the board minutes.
  • Sales tax treatment. The North Carolina Department of Revenue.
  • A specific transaction. A tax attorney or a CPA.

This page is not tax advice. Data center jobs: what a project brings a community covers the jobs side of the same decision. Why are people against data centers? sets the tax objection beside the others, and Are data centers bad? The objections, checked against the record checks them against the record.

Key recap

  • A data center pays county property tax on land, buildings, and equipment. In Catawba and Caldwell, a data-center operator is the largest taxpayer.
  • North Carolina still exempts qualifying datacenter equipment and software from sales tax.
  • The sales tax exemption on datacenter electricity ended for billing periods that start on or after August 6, 2026.
  • Local grants, fast equipment depreciation, and public costs make net revenue smaller than the announced investment.
  • Cost of Community Services studies show commercial land uses fewer services per dollar than housing, but they do not forecast one campus.

Questions

Do data centers pay property taxes in North Carolina?

Yes. Land, buildings, and business personal property are on the county tax roll. The state’s datacenter exemptions are sales tax exemptions, not property tax exemptions. A local grant can return part of the property tax.

What data center tax breaks does North Carolina offer?

The state exempts qualifying datacenter equipment and software from sales tax if the facility meets investment and other tests. Counties can also offer incentive grants under economic development agreements approved after a public hearing.

Did North Carolina repeal the data center sales tax exemption?

It repealed only the exemption on electricity. The repeal applies to billing periods that start on or after August 6, 2026. The equipment and software exemptions remain.

References

Primary sources cited on this page, in APA style.

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