Data centers promise to enrich Georgia even as the state is giving them nearly half a billion dollars a year in tax breaks, according to a recent state analysis.

The analysis for the Georgia Department of Audits and Accounts said the state effectively gave away $474 million in the fiscal year that ended in July by exempting data centers from some taxes.

Since 2018, Georgia has waived state and local sales taxes on some construction materials and on computers, servers and related equipment for larger data centers.

The review, released in late December, estimated 63 active data centers in the state, with 35 under construction and another 249 announced, most in greater metro Atlanta.

It said that 70% of the data center construction would have occurred without the tax breaks, meaning the state could have collected most of that half billion and still reaped most of the economic development benefits.

Despite the giveaway, the influx of data centers still produced a net economic gain for the state economy, said the report, produced by the Carl Vinson Institute of Government at the University of Georgia.

Data centers created 28,350 construction-related jobs in 2025, adding $3.4 billion to the state economy, it said. And they created another 5,471 data center operations jobs, for an additional $823 million injection into the state economy.

The centers enhance the value of the land they occupy, swelling local property tax collections. The report illustrated this with observations of four new data centers in metro Atlanta.

The land, on average, was valued at $26 million per complex, but the new servers and electrical equipment added $1.8 billion to the average property’s worth, with the new buildings that housed them adding at least $450 million more.

The total average value for each project approached $2.3 billion, leading to an average of nearly $28 million in annual property tax proceeds per project, the report said.

Tricia Pridemore, an elected member of the Georgia Public Service Commission, extolled the benefit of such local revenue at a hearing last month before she voted in favor of a controversial expansion of electricity generation capacity for Georgia Power.

The monopoly electric utility asked for, and got, approval for a nearly 10-gigawatt expansion, equal to the output of nearly five Hoover Dams. Eighty percent of that output is slated for current and future data centers, according to the report for state auditors.

“We have counties in the South Metro Atlanta area that are planning new school builds with this local revenue,” Pridemore said. “I know of another county that resides along the Chattahoochee River that is going to rebuild aged water infrastructure that they don’t have the tax base to pay for,” she added.

Cheap electricity is a far stronger draw than tax exemptions, the report said.

Companies that are deciding where to build a data center only consider exemptions after short-listing locations based on more important qualities, such as corporate tax rates, commercial real estate prices, the risk of natural disasters, the talent pool, utility and water lines, and proximity to highways, airports and ports, the report said.

But it said low-cost electricity, which accounts for three quarters of a typical data center’s operating costs, is the most important factor: “Electricity is such an essential consideration in the design of a data center that, unlike most commercial projects that are measured in cost per square foot, data center projects are designed and measured in cost per megawatt.”

The Georgia Power expansion faced public opposition in part due to the environmental consequences of burning more fossil fuels, since a significant portion will be new gas-burning plants.

“Methane gas plants release nitrogen dioxide and particulate matter that settle into the air children breathe on playgrounds,” said Rebecca Lesser, an Emory University student who took time from cramming for finals to speak against the proposed Georgia Power expansion at a Public Service Commission hearing last month.

“Methane traps heat 80 times more effectively than carbon dioxide, intensifying heatwaves, storms, and air quality emergencies,” she said. “I’m here because my generation is being asked to inherit the long-term consequences of decisions we didn’t make.”

Georgia Power representatives argued that the company had to expand quickly to meet spiking demand from data centers, which are powering a race for artificial intelligence.

The annual economic forecast by a think tank at UGA’s Terry College of Business predicted last month that data centers will be an economic boon for the state, citing nearly $50 billion in recently announced projects.

Amazon Web Services is investing more than $11 billion for data center facilities in Butts and Douglas counties, with at least 550 new, high-skilled roles projected plus thousands of construction and supply chain jobs, said the 2026 economic outlook by the Selig Center for Economic Growth. Microsoft is planning a $1.8 billion campus in Union City and a $1 billion campus near Rome. A company called T5 Data Centers is planning a $16 billion project in Georgia while another, Atlas Development, has proposed a $17 billion data center campus in Coweta County, which would be one of the largest on the planet.

Still, the Selig Center forecast cautioned that the effect may prove underwhelming.

“Though the economic impact of billions of dollars in capital investment by data centers is undeniable, their long-term employment and induced economic impact may be much smaller than imagined,” it said. “Data centers do create high-paying jobs, but employment numbers are low compared to the vast size of the facilities.”

The primary economic benefit is from the thousands of construction jobs created during the multi-year buildout phase, it said, though it noted that proponents argue those jobs can effectively become long-term as workers move from one project to the next.

Randy Beall, an advocate for building trades workers, said at a Public Service Commission hearing last month that approval of Georgia Power’s expansion would create good jobs.

“Data centers provide necessary jobs to help train the next generation of skilled workers, especially electricians and HVAC technicians,” Beall said. “Data centers operate around the clock and after that build out, they require full-time electrical and HVAC workers on-site to ensure they stay operational. That creates steady high-skilled jobs and helps to build a workforce Georgia will rely on as our economy continues to grow.”

Georgia’s tax incentives are designed to steer data centers to rural areas with more need for economic development, but the auditors’ report said that policy priority has met with mixed success elsewhere because workers in less developed areas typically lack the desired skills.

“Unfortunately,” the auditors’ report said, “research shows that, in most states, only a portion of newly created jobs go to target residents.”