Values for America · Brief for congressional offices

To the office of U.S. Representative Andrea Salinas

Re: HR 10102 (119th Congress), Data Center Community Reinvestment Act of 2026 · Latest action (2026-08-13): Referred to the Committee on Ways and Means, and in addition to the Committees on Energy and Commerce, and Science, Space, and Technology, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
VFA SI Solution #272 · published 2026-08-17 · https://www.valuesforamerica.com/solutions/272
Office of record (Congress.gov): 403 Cannon House Office Building, Washington, DC · (202) 225-5643

Data Center Community Investment Tax Credit Act of 2026

The measure, as described from the official record: To incentivize the construction and operation of data centers in economically distressed communities through federal tax credits and grants, while ensuring community reinvestment and environmental standards.

The proposal

This Act establishes a federal tax credit for qualified data center investments in designated Opportunity Zones or low-income communities, as defined by the Secretary of the Treasury in coordination with the Department of Commerce. The credit is equal to 20% of qualified capital expenditures, capped at $50 million per project, and is available for projects that begin construction before December 31, 2031. To qualify, a data center must enter into a community benefit agreement with the local government, which may include commitments to local hiring, workforce training, and infrastructure improvements. The agreement must be filed with the Secretary of Commerce and made publicly available. No federal funds may be used to condition state or local zoning decisions; the credit is purely a federal tax incentive. The credit is funded by a 0.1% surcharge on the gross receipts of data center operators with annual revenues exceeding $1 billion, collected by the Internal Revenue Service. The surcharge sunsets five years after enactment. The Government Accountability Office shall conduct a study every two years on the economic and environmental impacts of the credit, with a report to Congress. Enforcement is through IRS audit and recapture of credits if a project fails to maintain operations for at least five years or violates the community benefit agreement. The Secretary of the Treasury may issue regulations to prevent abuse.

Operative provisions (VFA proposal)

funding source: 0.1% surcharge on gross receipts of data center operators with annual revenues over $1 billion
funding amount: Estimated $2.5 billion over five years (based on CBO projection of surcharge revenue)
sunset years: 5 years
oversight body: Government Accountability Office (GAO) with biennial reports to Congress
enforcement mechanism: IRS audit and recapture of credits for noncompliance; community benefit agreements enforceable by state attorneys general
effective date: January 1, 2027

Constitutional basis

Article I, Section 8, Clause 1 (taxing and spending for general welfare)
Article I, Section 8, Clause 3 (interstate commerce regulation)
Tenth Amendment (reserving land-use authority to states)
Fifth Amendment Due Process (uniform application of tax benefits)

Concerns with the measure as written:

Potential commandeering of state and local land-use authority if conditions on federal funds are too prescriptive (Tenth Amendment).
Risk of exceeding enumerated powers if the bill regulates intrastate data center operations not substantially affecting interstate commerce (Commerce Clause).
Possible violation of equal protection if tax benefits are not uniformly available (Fifth Amendment Due Process).

Why both sides can back it (VFA’s assessment)

Democratic priorities honored: targeted community investment in low-income areas, environmental and labor standards through community benefit agreements, and GAO oversight. Republican priorities honored: tax incentives rather than direct spending or mandates, limited federal role (no commandeering of state zoning), and a sunset provision to prevent permanent expansion.

Values for America is a nonpartisan, constitution-first SI think tank. This brief is informational. It is a policy proposal, not law, and it does not support or oppose any candidate or party. Full analysis and sources: https://www.valuesforamerica.com/solutions/272 · Methodology: https://www.valuesforamerica.com/methodology