Congress Faces Proposal to Tax Electricity Use in Data Centers

A bill newly presented in Congress is designed to introduce a federal tax on electricity consumed by large data centers. This responds to the notion that communities face burdens due to the artificial intelligence (AI) upsurge, while tech firms gain from it. The bill arises amid rising worries regarding the surging electricity demand from AI and cloud computing infrastructures.

Called the Data Center Community Reinvestment Act of 2026 (H.R. 10102), it was put forward by Representative Andrea Salinas, a Democrat from Oregon, on August 13. The legislation aims to apply a 1-cent-per-kilowatt-hour excise tax on electricity used by data centers with more than 1 megawatt of power capacity. The generated revenue would be allocated to various areas including housing, conservation, environmental cleanup, transportation, and energy-related programs.

Reasons Behind the Legislation

Analyzing a report from the Department of Energy (DOE) produced in December 2024, U.S. data centers consumed close to 176 terawatt-hours of electricity in 2023, marking approximately 4.4 percent of total U.S. electricity use. This is projected to rise between 325 and 580 terawatt-hours by 2028, potentially making up to 12 percent of all U.S. electricity consumption.

Salinas notes that AI growth is escalating pressure on local infrastructure and power systems. “As AI use expands, and the demand for data centers grows, we need to ensure our communities aren’t left footing the bill,” Salinas stated when announcing the bill. “This legislation taxes energy usage by data centers and channels those funds into vital community programs.” Her office projects the tax might generate around $1.76 billion annually, to be distributed among:

• Land and Water Conservation Fund
• Housing Trust Fund
• Hazardous Substance Superfund
• Highway Trust Fund
• (New) Energy Technology Trust Fund

Comments from Salinas’ office were solicited by Newsweek via her website.

Will This Bill Reduce Electricity Costs?

This bill is not designed to directly lower Americans’ monthly electricity costs nor does it inherently cut utility rates. It aims to address rising concerns among policymakers that expanding power-heavy data centers may amplify local grid strain, leading to increased energy costs for households and businesses over time. The bill’s advocates, including Salinas, emphasize that communities should not have to shoulder infrastructure expenses supporting the AI wave.

Supporters intend for the bill to ensure that as data-center electricity needs escalate, the companies responsible for this growth contribute more to related public expenses. Though the bill targets preventing rate hikes due to data centers’ energy consumption, energy analysts warn that numerous factors affect electricity prices, such as fuel prices, utility investments, grid conditions, and state regulations. This means the ultimate impact on consumer power bills remains uncertain.

Comparative Legislative Efforts on the Federal and State Levels

H.R. 10102 is not the only recent legislative proposal aimed at AI infrastructure growth. Last month, lawmakers introduced the Data Center Water and Energy Transparency Act of 2026. This act mandates operators to report energy and water use to regulators, addressing the need for transparency as communities evaluate large-scale facility impacts.

Additionally, the Preventing Rate Inflation in Consumer Energy Act (PRICE Act) came earlier this year, obligating specific data centers to generate their own electricity, focusing on concerns about AI growth’s effects on consumer energy costs.

On the state level, Virginia enacted a unique tax directly associated with data-center electricity use. For each kilowatt-hour of electricity consumed, qualifying data centers owe 1.1 cents in tax to the state. This legislation’s discussion centered on possible consequences rising AI demand could have on consumer bills and grid reliability.

Future Steps

The Data Center Community Reinvestment Act is under consideration by the Committee on Ways and Means, as well as the Committees on Energy and Commerce, and Science, Space, and Technology. Although at the initial legislative phase, this proposal has sparked a conversation expected to grow in coming years: determining responsibility for the significant energy demands generated by AI developments and fostering community benefit from data center construction. As federal and state lawmakers deliberate these issues, energy costs are becoming an intrinsic part of the dialogue concerning America’s AI future.