New Study Examines Potential Economic, Tax Impact of Data Centers In Kentucky

A new study examines the potential economic impact of hyperscale AI data centers in Kentucky, finding that a single facility could generate hundreds of millions of dollars in state and local tax revenue while supporting thousands of construction jobs and hundreds of permanent and related jobs.

The report, prepared by Commonwealth Economics Partners and commissioned by NetChoice, modeled the potential economic and fiscal impact of a hypothetical $4 billion, 400-megawatt AI data center in five regions of Kentucky. The analysis includes a two-year construction period and the first 10 years of operations.

Because no specific project or site was analyzed, researchers modeled the same facility across five regions using average local tax rates. The estimates varied by location and local tax structures.

“This report gives Kentucky communities a clear look at what data center investment would mean for their tax base, their schools, and their local economy,” Steve DelBianco, president and CEO of NetChoice, said in a press release. “The findings are consistent across five regions in Kentucky: a single 400-megawatt data center would generate tens of millions of dollars annually and support hundreds of jobs. These facilities generate substantial, durable revenue that enables property tax reduction while also funding the infrastructure improvements and public services families rely on most.”

Over the 12-year period, the study estimates a single facility could generate:

• $290 million to $435 million in local tax revenue, including $167 million to $222 million for local public schools
• $227 million to $232 million in state tax revenue
• Approximately 200 permanent jobs with an average annual wage of $105,000
• An additional 213 to 330 indirect and induced jobs across Kentucky
• Approximately 2,800 to 3,400 construction jobs annually during the two-year buildout

Data centers differ from many traditional economic development projects in that they are highly capital-intensive yet require a relatively small permanent workforce, the report states. A 400-megawatt facility is estimated to represent roughly $4 billion in investment, much of it in computer hardware, electrical systems, and other equipment.

That investment can generate substantial property tax revenue for local governments and school districts, the report notes. At the same time, the relatively small permanent workforce can mean less long-term demand on schools and other public services, according to the study.

The report also shows the impact on other states with significant data center development. In Virginia, data centers generated roughly $1 billion in local tax revenue and $640 million in state tax revenue in 2022. In Loudoun County, the local government receives about $26 in tax revenue for every $1 spent providing services to data centers, while Prince William County receives about $13, according to the report.

In Texas, data centers generated roughly $1.6 billion in state tax revenue and $1.6 billion in local tax revenue in 2024. The report also points to Georgia, where data centers directly support about 3,480 full-time jobs and generate approximately $276 million annually in wages and benefits.

The report also examines issues surrounding data center development, including electricity demand, water use, and noise, and notes that communities considering projects should work with utilities and developers to evaluate local capacity and potential impacts.

The full report is available here.