West Virginia Governor Patrick Morrisey has unveiled a seven-point strategy aimed at reducing and eventually eliminating the state's personal income tax, leveraging revenue generated by an anticipated boom in hyperscale data center development. The plan, developed in collaboration with state lawmakers, also allocates funds for county governments, infrastructure projects, and utility upgrades.
Data centers, essential for powering the artificial intelligence revolution, have become a point of contention nationwide. While states compete for billions in investment and high-paying jobs, communities often voice concerns about the substantial demands these facilities place on energy grids, water resources, and local infrastructure.
Morrisey's proposal designates 50% of the revenue generated by approved hyperscale data center projects, under the state's "High Impact Data Center Designation (HIDC)" process, directly toward the reduction and eventual elimination of the state personal income tax. None of this revenue is slated for the state's general fund. West Virginia's current top marginal income tax rate is 4.58%, following a 21% cut enacted under former Governor Jim Justice and an additional 5% reduction this year.
Revenue Allocation and Local Impact
Under the governor's plan, counties that host data centers would receive 30% of the project revenue to support local schools and government. An additional 10% would be distributed among all 55 counties, and the remaining 10% would be dedicated to infrastructure improvements, including public water systems. This focus on water infrastructure aims to address long-standing issues in some parts of the state.
"This shared framework gives us the exact blueprint we need to attract billions in private investment, create thousands of high-paying construction and technology jobs, lower taxes for our citizens, and revitalize economically distressed regions, all while preserving the wild and wonderful state we call home," Morrisey stated.
The bipartisan legislation underpinning the governor's plan also includes provisions intended to shield existing utility customers from increased costs associated with data center expansion. This measure addresses a significant concern, particularly in areas bordering densely developed regions like Northern Virginia, where data center growth has already led to increased utility expenses.
Community Concerns and Legislative Support
Despite the potential economic benefits, some West Virginia residents and lawmakers have expressed reservations. Signs opposing data center development have appeared in counties bordering Virginia, where residents point to rapid expansion in areas like Loudoun County as a cautionary tale regarding proximity to residential zones and increased utility costs.
West Virginia House Minority Leader Sean Hornbuckle, who co-sponsored the 2025 law that facilitated the governor's plan, has recently called for amendments to allow for greater local control over data center siting decisions. He voiced concerns about the "dangerous precedent" set by the law regarding property rights.
However, Governor Morrisey has reiterated that the plan ensures all West Virginians will benefit directly from data center revenue. The state legislature, through its leadership, has expressed support for the regulated growth of data centers as a means to diversify the state's economy.
The plan also addresses power grid reliability, mandating that data center developers collaborate with grid operators like PJM. Furthermore, it frames data centers as strategic national infrastructure, relevant to the United States' economic competition with China.