Gov. Pritzker Pauses New Data Center Tax Incentives
Governor outlines framework to protect consumers and lower energy costs, calls on General Assembly to act in veto session
June 5, 2026
CHICAGO — Today, following inaction from the Illinois General Assembly, Governor JB Pritzker is directing the Illinois Department of Commerce and Economic Opportunity (DCEO) to pause processing agreements for the Data Center Investment Program starting July 1. The Governor also outlined a comprehensive framework for Illinois to address the growing impact of data centers on energy affordability and reliability, water resources, and local communities.
“Illinois has an opportunity to continue leading in technological innovation and economic growth, but we also have a responsibility to protect working families and local communities as the data center industry rapidly expands,” said Governor JB Pritzker. “I am directing my administration to pause the processing of data center agreements while we continue working with the General Assembly and stakeholders on a comprehensive framework that protects affordability, safeguards our natural resources, and ensures responsible growth across Illinois. I look forward to continuing these conversations and getting this done the right way for Illinois working families and communities.”
As AI and data center development continue to expand at a rapid pace across the country, Illinois must ensure that working families are not left paying the price through higher utility bills, strained reliability, and increased pressure on local water resources. While Illinois remains committed to economic growth and technological innovation, the State must establish clear guardrails to ensure data center growth benefits communities and consumers alike.
As part of the Governor’s proposed budget, the administration pursued these reforms through the legislative process because Illinois needs a comprehensive, long-term framework for data center policy. As a result, the Governor is also calling on legislators, consumer advocates, labor organizations, environmental stakeholders, utilities, local governments, and industry leaders to work together during veto session to advance comprehensive reforms guided by principles outlined below.
Gov. Pritzker’s Framework on Data Center Policy to Protect Consumers and Lower Costs
1. Data Centers Should Pay Their Fair Share
Data centers use massive amounts of electricity, water, and other resources — sometimes as much as a mid-sized city. To keep up with the infrastructure demands of data centers and keep bills more affordable for Illinois families, data center companies can direct more of their own financial resources toward their growth. Illinois legislation should:
- Create a rate class for data centers and establish data center electricity rates.
- Assign the costs that data centers impose on the electric grid to the new data center rate class, including distribution, generation, and transmission, where possible; assign to data centers the costs that they impose on water systems.
- Set energy and water efficiency requirements for data centers using established standards to help keep costs low and protect the environment.
- Ensure all utilities in the state are equipped to fairly manage and allocate the cost of data centers’ demand.
2. State Tax Incentives Should Be Paused
As the demand to develop data centers is increasing at a rapid pace, pausing state incentives for data centers is necessary to understand whether these incentives are driving development that is insensitive to consumer costs and environmental impact.
3. Energy Reliability Must Prioritize Illinois Working Families and Businesses
Data centers should temporarily go dark when the grid is strained to ensure reliable electric service for Illinoisans. Legislation should direct utilities to assign data centers interruptible electric service based on how much of their own clean energy they self-supply. Data centers that don't supply their own clean energy could have their electric service interrupted when the grid is strained so Illinoisans’ lights stay on.
4. Data Centers Should Support the Development of New Clean Energy
Data centers should generate or pay for their own clean energy resources, so Illinoisans don't foot the bill for their consumption.
Data centers’ massive energy use strains supply and has driven up bills. In PJM, the electric grid that serves 67 million people across 13 states including Illinois, demand from data centers has already raised costs by $13 billion, and data center demand could raise costs another $37 billion in Illinois alone in coming years.
- Establish a framework for data centers to generate or pay for their own new clean energy resources that allows participants to receive timely service and financial consideration for their contributions to Illinois’ clean energy goals.
5. Illinois Must Protect Its Water Resources
Data centers can use massive amounts of water — up to 5 million gallons a day, as much as a medium-sized town. Every data center should be required to use efficient systems that minimize water usage. We also need to monitor, manage, and plan for this water use as a state to protect one of our most precious resources.
- Require data centers to acquire comprehensive water permits that account for, regulate, and disclose their water usage and impact on water quality.
- Require data centers’ water use to be sustainable and not deplete our water resources, including incentivizing water reuse.
6. Illinois Must Maintain Strong Clean Air Protections
Air pollution from data centers’ power generation could cause up to $20 billion in public health burden nationwide by 2030, with those impacts highly concentrated in a few communities. Illinois needs safeguards on data centers’ generators, paired with affordable clean energy solutions, so every Illinoisan can breathe clean air and enjoy a healthy climate.
- Preserve strong clean air standards for data centers’ generators.
- Account for cumulative impacts in permits in environmental justice communities.
7. Communities Deserve Transparency and a Meaningful Voice
Illinoisans have a right to know what’s happening in their communities, including how much water, electricity, and other resources data centers will use. We must ensure tech companies operate a transparent process with opportunities for community members to voice their concerns and opinions.
- Ban nondisclosure agreements between data centers and local governments.
- Require data centers to regularly report their energy and water use.
- Require data centers to post public notice when applying for permits.
- Require data centers to enter into community benefits agreements with the communities where they locate, through a process with a clearly defined scope and timeline.
Existing incentive agreements under the Data Center Investment Program, including those entered into with DCEO before July 1, 2026, will be honored.
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