Loudoun County data center tax revenue runs to roughly $895 million a year, a figure that nearly matches the county’s entire operating budget of about $940 million. That money comes from two local taxes layered on top of each other: a real property tax on the buildings and land, and a business tangible personal property tax on the servers, storage, cooling, and power equipment inside. The personal property side is the bigger driver by far.
The Two Taxes That Produce the Money
Under Virginia Code 58.1-3200, localities may tax all real property, including the land and structures data centers occupy.1Virginia Code Commission. Virginia Code 58.1-3200 – Real Estate Subject to Local Taxation; Taxable Real Estate Defined; Leaseholds Data center shells are large but architecturally simple, and the real estate itself makes up the smaller share of what the county collects.
The larger share comes from business tangible personal property tax, which covers everything inside: servers, storage arrays, network switches, cooling systems, and power distribution equipment. These items are classified as personal property rather than part of the building.2Loudoun County. Business Tangible Personal Property Tax A single campus can hold hundreds of millions of dollars in equipment, and operators typically refresh that hardware every three to five years, which means the taxable base replenishes on a rolling cycle.
The Rate on Data Center Equipment
Loudoun’s general business personal property rate is $4.15 per $100 of assessed value.3Loudoun County. Affirmation of Personal Property Tax Rates for Tax Year 2026 Data center computer equipment is taxed at a lower rate: $1.06 per $100 less than the vehicle rate, which puts it at $3.09 per $100 of assessed value.4Loudoun County. Data Centers in Loudoun County
The reduced rate looks like a discount, but the taxable base is enormous. Even at $3.09 per $100, a single large campus generates bills that outrun what most commercial businesses will ever pay. The county trades a slightly lower per-dollar rate for a vastly larger base of high-value assets, and the arithmetic works in the county’s favor.
How Equipment Is Assessed Each Year
Computer hardware loses value fast, so the county applies a depreciation schedule to set each year’s taxable value. Effective January 1, 2026, that schedule was lengthened and its factors adjusted. Equipment in its most recent year is now assessed at 60% of original capitalized cost. The percentage steps down with age, hitting 10% by the fifth year and bottoming out at 5% for equipment six or more years old.5Loudoun County. Business Personal Property Tax Assessment Schedules
Original cost, for this purpose, includes purchase price, shipping, installation, and sales tax. Because operators keep replacing older servers with new ones assessed at 60 cents on the dollar, the base rarely drifts toward the floor for long.
Business owners must declare all taxable equipment to the Commissioner of the Revenue by March 1 each year, reporting original cost and year of purchase for every asset. In 2026 the deadline shifted to March 2 because March 1 fell on a weekend.6Loudoun County. Loudoun County Business Tax Deadline is March 2, 2026 Missing or inaccurate filings can trigger statutory assessments, late fees, and interest.
What the Revenue Pays For
Money from data centers flows into the general fund, which supports Loudoun County Public Schools, the Sheriff’s Office, Fire and Rescue, and debt service on roads and other infrastructure.7Loudoun County. Frequently Asked Questions – Data Centers, Tax Revenues and the County Budget Because data centers absorb so much of the operating cost, the Board of Supervisors has been able to cut the real property tax rate every year for the past decade, from $1.145 per $100 in 2016 to $0.805 per $100 in 2025, where it held for 2026.8Loudoun County. Data Centers in Loudoun County
A flat rate does not guarantee a flat bill. Rising assessed home values push the dollar amount up even when the rate holds steady. For 2026, the average homeowner’s bill was expected to rise by about $141. County officials have discussed further reductions to both the real property rate and the vehicle personal property rate if data center revenue keeps growing.7Loudoun County. Frequently Asked Questions – Data Centers, Tax Revenues and the County Budget
The State Sales Tax Exemption in Play
Local property taxes are not the whole picture. Virginia’s sales and use tax exemption on data center equipment purchases has been valued at roughly $1.6 billion a year statewide, and it has been a major reason operators have concentrated in Loudoun. By skipping sales tax on servers and cooling gear, operators lower upfront costs and accelerate both new construction and hardware refreshes, both of which feed the local personal property tax base.
As of early 2026, the exemption’s future was unsettled. The General Assembly passed several data center bills in its most recent session, but the state budget stalled over the exemption. One chamber sought to eliminate it; the other proposed tying it to environmental compliance. A special session was scheduled for late April 2026 to resolve the standoff. If the exemption is scaled back, new data center construction in Loudoun could slow, which would eventually reach the growth curve of local revenue.
The Risk of Leaning on One Industry
The scale of Loudoun’s dependence on a single industry is unusual for a local government. When one sector supplies nearly the full operating budget, any disruption to that sector translates directly into fiscal stress. A construction slowdown, a shift in state incentives, a technology change that pulls computing away from centralized facilities, or a decision by a major cloud provider to expand elsewhere would each land hard on county finances.
County officials have acknowledged as much, noting that rapid and uneven growth in data center revenue has actually made long-range planning harder because the county must avoid building a permanent cost structure on top of what could be a cyclical peak.4Loudoun County. Data Centers in Loudoun County At the same time, the county has begun tightening land-use rules on data center development in response to community concerns about noise, energy demand, and the appearance of industrial buildings near homes. Those restrictions may constrain the growth of the same tax base the county now leans on, and Loudoun will be working through that tension for years.