Big tech companies scored a big win in Washington state with the defeat of legislation regulating electricity rate and environmental impacts of data centers — but it lost a significant tax break for the facilities with the 11th-hour passage of Senate Bill 6231.
The state’s Legislature wrapped up its 2026 session Thursday night shortly after signing off on SB 6231, which eliminates a sales tax break on equipment and labor required to refurbish existing data centers. The measure preserved tax benefits for new facilities.
Dan Diorio, vice president of state policy for the Data Center Coalition, predicted significant fallout, calling it a “self-inflicted hit to the state’s economy” that will ultimately cost jobs and tax revenue, creating “uncertainty within the state’s business climate.”
In 2023, data centers provided nearly 9,000 jobs, plus 39,000 indirect jobs in Washington, according to a PwC report commissioned by the Data Center Coalition. The sector generated $1.8 billion in state and local tax revenue.
The equipment inside data centers is typically replaced every three to five years, Diorio said.
The tax break will end on July 1. The state’s Department of Revenue estimates its elimination will generate $63.1 million in the current biennium and $143.9 million for the 2027-29 period.
“We have to make a lot of hard choices this year as we try to balance the budget,” said Sen. Noel Frame, D-Seattle, sponsor of the legislation, in earlier public testimony.
But while this bill passed, data center owners ducked a suite of far-reaching rules included in House Bill 2515. The measure was approaching the legislative finish line last month when Microsoft came out in opposition.
“We respectfully urge the committee not to advance the bill without significant changes,” Lauren McDonald, Microsoft’s senior director of Washington state government affairs, said before a Senate committee. She described the legislation as “uniquely anti-competitive.”
Microsoft has an estimated 30 data centers in Washington, while Amazon has historically concentrated its Pacific Northwest data center footprint in Oregon. Amazon did not testify on the legislation, but the Seattle Times reported that both companies actively lobbied for modifications to the bill.
HB 2515 opponents — including representatives from the tech sector, labor unions and local municipalities that have benefited financially from the facilities — testified that data centers support essential computing infrastructure, create jobs and provide increased property tax revenue.
But across the U.S., leaders and communities at every level are worried about the harms posed by the surge in data centers that power the internet and AI. President Trump earlier this month called major tech companies to the White House to pledge they would not drive up electric bills.
HB 2515 would have codified that commitment and created rules that facilities disclose their use of energy and water that cools data center electronics. It also set requirements for clean power usage and mandates that data center owners share forecasts on their energy needs.
The legislation had support from environmental groups, tribal nations and ratepayer advocates.
“Some of the largest and most powerful corporations in the world deployed an extraordinary lobbying effort to weaken, delay, and ultimately stop this legislation,” said Rep. Beth Doglio, D-Olympia, sponsor of HB 2515. She added that she remains committed to continuing the fight.
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