This story was provided from the NJ State House News Service through the NJ News Commons.
New Jersey Assembly State and Local Government Committee advanced legislation Tuesday to cancel $250 million in state tax credits for new AI data centers.
Bill A5165, also known as the “End Data Center Tax Credits Act,” seeks to eliminate the aid to these projects. The funds, initially proposed to be re-allocated to battery storage for renewable energy and a one-time $100 tax credit for lower-income electric customers, is now to be cancelled entirely.
This funding was originally launched in 2024 to bring the AI industry and jobs to New Jersey under former Gov. Phil Murphy. Now opponents question whether one of the world’s most profitable industries still needs public subsidies while residents face rising electricity costs.
But in the face of growing public opposition to data centers, Assembly Member Andrew Macurdy, a Democrat from Summit, said his proposal reflects a reevaluation of corporate tax incentives.
“These corporate tax credits are no longer the best use of our taxpayer resources,” Macurdy said, arguing that energy demands from highly profitable data centers ultimately raise costs for residents.
Macurdy said tax incentives are “the equivalent of paying AI data centers $250 million in state funds simply to locate their facilities within the state’s borders. … Data centers need us, our resources, our land, more than we need them.”
Assembly Member Balvir Singh, a Democrat from Burlington Township, said that AI data centers backed by wealthy corporations “do not need additional subsidies on the backs of New Jersey taxpayers.”
In contrast, Jack Ramirez of the New Jersey Business and Industry Association opposed the bill, arguing data centers provide major economic value. He testified that the industry contributed “$3.46 billion in state and local taxes,” supported 172,020 jobs and added $31 billion to New Jersey’s gross domestic product. Eliminating the credit, he argued, would lower New Jersey’s competitiveness.
“This tax credit isn’t specifically for data centers,” he said in an interview. “It’s for AI-related development more broadly. While the state is currently debating data centers and their impacts, eliminating the entire program would affect much more than data centers. It would have consequences for New Jersey’s economic competitiveness overall.”
But Peter Chen of NJ Policy Perspective testified, “we shouldn’t be putting [millions] towards subsidizing data centers that are jacking up utility rates and causing harm to communities.”
The bill passed 5-0, with Assembly Member Alex Sauickie, a Republican from Jackson, abstaining, stating he wanted the money returned to taxpayers.
Assembly Member Erik Simonsen, a Republican from Lower Township, also abstained, saying, “I wished the money was going back to the taxpayers … not into the state black hole.”
The Senate Budget and Appropriations Committee is scheduled to weigh an identical measure Wednesday. According to its website, the state Economic Development Authority is no longer accepting new tax credit applications while it reviews the program.
