S. 5054: Data Center Tax Accountability and Disclosure Act of 2026

This bill would change tax rules and add reporting requirements for large data centers, especially those used for artificial intelligence.

Tax changes for AI data centers

The bill would remove bonus depreciation for property used in an “AI data center.” Bonus depreciation is a tax break that lets businesses deduct the cost of qualifying equipment faster than usual. Under this bill, that tax break would no longer apply to property used in qualifying AI data centers.

An “AI data center” would generally mean a permanent or semi-permanent facility, or group of facilities, that is used for data storage, processing, and telecommunications equipment, includes at least one graphics processing unit, and is used for artificial intelligence work for at least 20% of the facility.

The bill would make an exception for data centers that have LEED Gold or Platinum certification, or an equivalent standard approved by the Secretary of Energy and the EPA Administrator. Those facilities would not be treated as AI data centers for this tax rule.

For AI data centers that are leased, the bill would require depreciation to be handled under certain leased-property rules rather than the usual treatment.

These tax changes would apply only to property placed in service after the bill becomes law.

Reporting requirements for large data centers

The bill would create a disclosure system for “covered data centers,” meaning data centers with a power demand of 25 megawatts or more. This would include some dual-use facilities and facilities sharing space with federal data centers, but it would exclude dedicated federal data centers.

Operators of covered data centers would have to submit:

• An initial disclosure before a new covered data center begins operating, estimating future electricity and water use for its first year.
• An initial disclosure for existing covered data centers within 180 days after enactment, using the most recent full year of data.
• An annual report by December 31 each year covering the prior calendar year.

Information that must be reported

The annual reports would have to include detailed information about:

• Water use, including how many gallons were withdrawn or consumed each month.
• The source of the water, such as municipal water, groundwater, surface water, or reclaimed water.
• Water usage effectiveness.
• Water rights, permits, or long-term supply agreements.
• Electricity use, including monthly electricity consumed or contracted for, and peak demand.
• Any behind-the-meter power generation and how much power comes from each source.
• Greenhouse gas emissions tied to energy use.
• Power usage effectiveness.
• Long-term power purchase agreements or utility service agreements.
• Backup power equipment, fuel storage, hours run on backup power, and emissions from backup power.
• State setback requirements, zoning variances, special use permits, or similar approvals.

Federal and state handling of the disclosures

The bill would let states choose to receive these disclosures themselves. If a state opts in, it would collect the data and send annual compilations to the Department of Energy and the EPA. If a state does not opt in, the data would go directly to those federal agencies.

The Department of Energy and the EPA would have to publish annual reports on their websites containing the submitted disclosures, reports, and state compilations, subject to any national security-related limits.

For federal data centers, the Office of Management and Budget Director would have to set standards for collecting and, where appropriate, publishing information about dedicated federal and dual-use federal data centers, while protecting national security information.

Limits on confidentiality agreements

The bill would make nondisclosure or confidentiality agreements unenforceable to the extent they block required reporting or prevent utilities, state agencies, or local governments from sharing required information with the government. It would also prevent those agreements from requiring approval by a data center operator before responding to official information requests related to the bill.

Enforcement

Data center operators that fail to file required disclosures or reports could face civil penalties:

• Up to $50,000 per day for negligent failures.
• Up to $100,000 per day for knowing failures or for submitting false or materially misleading information.

States that opt in could also impose fines and carry out other enforcement actions consistent with the bill.

Rulemaking

The Secretary of Energy and the EPA Administrator would have to issue regulations within 180 days to set standardized reporting formats and procedures for submission and review.

Relevant Companies

• MSFT — Microsoft operates and leases large data centers, including facilities used for AI workloads, so it could be affected by both the depreciation limits and the new reporting requirements.
• AMZN — Amazon’s cloud business operates large data centers that may fall within the reporting threshold and could be affected by the tax and disclosure rules.
• GOOGL — Alphabet operates large data centers supporting cloud and AI services, which could be subject to the new disclosure rules and the AI data center tax change.
• META — Meta uses large data centers for AI and other computing needs, and some facilities could be affected by the bill’s tax and reporting provisions.
• ORCL — Oracle operates cloud data centers and could be impacted if its facilities meet the bill’s size and AI-use definitions.
• IBM — IBM has data center and cloud operations that may be affected if they meet the covered-data-center threshold.
• DLR — Digital Realty owns and operates data center real estate, so facilities leased to operators could be affected by the leasing and disclosure provisions.
• COR — CoreSite operates data centers and could be affected if its facilities are covered by the reporting requirements.
• QTS — QTS Realty Trust operates large data centers, which may be subject to the bill’s data-use reporting and tax changes.
• EQIX — Equinix operates many large data centers and could be affected if any facilities meet the power-demand threshold.