HB 897 Virginia House of Delegates · 2026 Regular Session

Retail Sales and Use Tax; exemption for data centers, delayed effective date.

Summary

Retail sales and use tax; exemption for data centers. Requires a data center operator, in order to be eligible for the existing data center sales and use tax exemption, to (i) beginning July 1, 2027, not use co-located generating facilities that emit carbon dioxide, other than backup generators; (ii) beginning July 1, 2029, contract for a certain percentage of energy, capacity, and renewable energy certificates from clean energy resources, as evidenced by a certification from the State Corporation Commission, or contracts and service agreements; (iii) utilize only non-carbon dioxide-emitting backup power sources, such as energy storage resources, beginning on a date dependent on the data center's initial service date; and (iv) demonstrate, for any new data center issued a final certificate of occupancy or its equivalent on or after January 1, 2030, or for any data center operator seeking an amended memorandum of understanding, sufficient investment in environmental management and energy efficiency measures to provide system-wide benefits, as defined in the bill. Finally, the bill has a delayed effective date of July 1, 2027.

Bill status passed 3 of 5 stages cleared

Introduction

Jan 2026

Committee Review

Mar 2026

House of Delegates Passage

Feb 2026

Senate Passage

Governor

Introduced Jan 13, 2026 Last action Mar 3, 2026

Maddy AI version diff · 4 comparisons

What changed between versions

Appropriations Substitute → Finance and Appropriations Substitute · 5 edits

MODERATE

The bill was amended from a House version to a Senate Finance and Appropriations Substitute version, primarily changing the committee attribution and date while retaining the same substantive policy content regarding retail sales tax exemptions for data centers and other industries. The core provisions remain identical, including the $150 million investment threshold for data center tax exemptions, job creation requirements, and environmental compliance standards.

TECHNICAL

Changed committee attribution from House Committee on Appropriations to Senate Committee on Finance and Appropriations, reflecting the bill's progression through the legislative process.

Updated date from February 13, 2026 to March 3, 2026, indicating when the Senate committee proposed the substitute amendment.

Changed bill type designation from 'HOUSE SUBSTITUTE' to 'AMENDMENT IN THE NATURE OF A SUBSTITUTE' to reflect Senate committee action.

Reformatted document layout with different spacing and line breaks, but no substantive policy changes.

Added 'DRAFT' and 'OFFERED FOR CONSIDERATION' headers with dates, indicating the document is in draft form for legislative review.

Introduced → Finance Substitute · 7 edits

MODERATE

The bill was amended from its original introduced version to a Finance Committee substitute version. The primary substantive change is the addition of new data center tax exemptions with specific job creation and capital investment requirements, along with environmental compliance standards. The bill also added provisions for clean energy procurement and reporting requirements for qualifying data center operators.

Scope change

The bill's scope expanded to include significant new tax exemptions for data centers that meet specific investment and job creation thresholds, while adding environmental requirements for carbon emissions and clean energy procurement.

ELIGIBILITY

Added new subdivision 18 creating tax exemptions for computer equipment and software used in data centers that invest at least $150 million and create at least 50 new jobs paying 1.5x the prevailing wage in Virginia localities.

REQUIREMENT

Added environmental requirements requiring data centers to use non-carbon dioxide-emitting backup power sources and contract for clean energy resources, with specific deadlines for compliance.

Added reporting requirements mandating annual reports to the Virginia Economic Development Partnership Authority on employment levels, capital investments, wages, and tax benefits.

TIMELINE

Added new exemption extension provisions (subdivision 19) allowing data centers that make $35 billion in investments and create 1,000 jobs to extend exemptions through 2040, and $100 billion investments with 2,500 jobs to extend through 2050.

DEFINITION

Added definitions for 'clean energy resources' and 'distressed locality' to determine eligibility for the data center tax exemptions.

ENFORCEMENT

Added requirements for memorandum of understanding between data center operators and the Virginia Economic Development Partnership Authority, including provisions for repayment if job or investment goals are not achieved.

TECHNICAL

Changed the bill header from 'Introduced' to 'Offered for Consideration' and added 'Amendment in the Nature of a Substitute' indicating the bill was amended by the House Committee on Finance.

Floor votes · House of Delegates Feb 17, 2026

How they voted

51–33

Passed · 3 other

Total votes 87

Feb 17, 2026

D Democratic52

50 Yea 2

96% Yea

R Republican35

1 Yea 33 Nay 1

94% Nay

Vote distribution

All Yea All Nay Mixed No data

Full legislative history

Actions timeline

Total actions

Key actions

Committee

Mar 3, 2026

Upper · Passed

Senate committee offered

upper

Feb 18, 2026

Committee

Referred to Committee on Finance and Appropriations

upper

Feb 17, 2026

Lower · Passed

Read third time and passed House (61-Y 34-N 0-A)

lower

Feb 13, 2026

Lower · Passed

Reported from Appropriations with substitute (16-Y 6-N)

lower

Feb 13, 2026

Committee

Assigned HAPP sub: Commerce Agriculture & Natural Resources

lower

Feb 11, 2026

Lower · Passed

Reported from Finance with substitute and referred to Appropriations (16-Y 5-N)

lower

Feb 11, 2026

Lower · Passed

House committee offered

lower

Feb 5, 2026

Committee

Assigned HFIN sub: Subcommittee #1

lower

Jan 13, 2026

Committee

Referred to Committee on Finance

lower

1 primary · 9 co-sponsors