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Bill

HB 961

Retail Sales and Use Tax; commercial and industrial exemptions, data centers.

2026 Regular Session Introduced by Vivian Watts

HB 961 expands Virginia sales tax exemptions for commercial, industrial, and data center operations, reducing state revenue to incentivize business investment and infrastructure development.

Assigned HFIN sub: Subcommittee #1
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WeVote Research Nonpartisan
Bill Summary · HB 961

Legislative bill overview

HB 961 creates or modifies sales and use tax exemptions for commercial, industrial, and data center operations in Virginia. The bill adjusts which business activities qualify for tax relief and under what conditions, potentially affecting how these entities are taxed on equipment, infrastructure, and operational purchases.

Why is this important

Tax exemptions directly impact state revenue and business competitiveness. Data center exemptions are particularly significant given Virginia's prominence in the data center industry (Northern Virginia hosts major cloud infrastructure). These changes affect both the state budget and business investment decisions in the Commonwealth.

Potential points of contention

  • Revenue impact: Expanding exemptions reduces state tax revenue that funds schools, infrastructure, and services—legislators must weigh economic incentives against budget constraints
  • Fairness concerns: Exempting large commercial entities while other businesses pay full taxes raises equity questions about who bears the tax burden
  • Data center specificity: Singling out data centers for favorable treatment may disadvantage other advanced manufacturing or tech sectors seeking similar benefits, or alternatively, may be justified by their outsized economic contribution and competition from other states

Compiled from official sources — confirm details with the bill’s official record.

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