Four Senate Bills Target Data Center Tax Breaks. Each Draws the Line Differently.

Sen. Mark Warner, D-Va., introduced S. 5054, the Data Center Tax Accountability and Disclosure Act of 2026, on July 21, 2026, and it was referred to the Committee on Finance. The bill text amends section 168(k) of the Internal Revenue Code so that bonus depreciation does not apply to any property used in an AI data center placed in service after enactment. It defines an AI data center as a structure or group of structures dedicated to housing and operating IT and network equipment, including at least one graphics processing unit, at least 20 percent of which is used for developing or operating artificial intelligence. A facility certified LEED Gold or Platinum is excluded, and the Energy Department and EPA may jointly approve an equivalent standard. A separate section requires every operator of a data center with power demand of 25 megawatts or more to file an initial disclosure, and then an annual report by December 31, covering monthly water withdrawn or consumed and its source, monthly electricity and peak demand, behind-the-meter generation, greenhouse gas emissions, power and water usage effectiveness, power purchase agreements, backup power capacity, fuel stored and hours run, and the setback rules, zoning variances and special use permits that apply to the site. The Tax Foundation estimated in August that the depreciation change would raise $29.9 billion over 2027 to 2036 on a conventional basis. That is the Tax Foundation’s estimate, not an official score.

Senate Finance Committee Ranking Member Ron Wyden, D-Ore., released draft legislative text on October 23, 2026. His committee’s technical summary describes four changes to existing benefits, each limited to data centers of 25 megawatts or more: no bonus depreciation for data center assets placed in service in taxable years beginning after enactment; no Opportunity Zone business status for data center service businesses or property acquired after enactment; and, for a private REIT, defined as one with less than 80 percent of its stock traded on a national exchange, rent from a data center acquired after enactment would not count as qualifying income under either the 75 percent or the 95 percent test. A fourth provision says data center build-out costs cannot be claimed as research credit supplies. The draft also creates a federal excise tax on gross receipts from data center services, with the rate left to be set after revenue estimates. On the Republican side, Sen. Josh Hawley’s S. 5418, introduced September 16, would exclude data centers from qualified Opportunity Zone businesses, and Sen. Bernie Moreno’s S. 5689, the RECLAIM Act, introduced October 15, would bar federal incentives for AI data centers of 100 megawatts or more and impose a 100 percent excise tax on state and local incentives they receive.

The tax change most owners will read about is bonus depreciation, but the one that touches real estate structures most directly is the private REIT rule. A large share of data center ownership sits in vehicles that are not exchange-traded: private and non-traded REITs, and joint ventures held through them. Under Wyden’s draft, a private REIT could keep earning qualifying rent from data centers it already owns, but rent from a 25 megawatt or larger data center it acquires after enactment would be bad income for both REIT tests. That changes who can buy a stabilized data center in a REIT wrapper, and it could change the bid. The draft is a discussion text, not an introduced bill, so its wording can still move. That reading is PSV’s, not the committee’s.

The second point is the definitions. The four texts reach different buildings, and the difference is the whole diligence question.

Tax exposure here is a classification problem before it is a tax problem, and classification across a portfolio is where an assistant helps. Inputs: for each data center or powered shell, the contracted and peak megawatts from the utility agreement, the tenant’s stated use and any GPU deployment language in the lease, LEED certification status, the placed-in-service date, the ownership vehicle and whether its shares trade on an exchange, any Opportunity Zone designation for the parcel, and every state or local incentive agreement. Output: one row per asset showing which of the four definitions it meets, which provision would touch it, and the date that decides it, with each cell citing the lease clause, utility letter or certificate it came from. Where the record is silent, such as the share of a tenant’s capacity used for AI, the row says unknown instead of guessing.

The reviewer is the owner’s tax counsel, together with the asset manager who knows the leases. The approval gate is that nothing in that ledger changes a hold, sell, structure or closing date until counsel has read the current bill text and signed the row. Two things to design against. The first is collapsing the thresholds: a 30 megawatt building meets Wyden’s line and Warner’s disclosure line but not Moreno’s, so a single yes or no flag is wrong. The second is treating the Warner disclosure section as a tax item. It is a reporting duty on the operator, which in a leased building may be the tenant, and the setback, variance and special use permit history it asks for usually sits in the landlord’s entitlement files.