Blab AI
New Jersey Legislature Passes Bill to Eliminate $250 Million AI Data-Center Tax Credits
New Jersey lawmakers cut a $250 million AI data‑center subsidy in half on June 30, when the Senate approved the End Data‑Center Tax Credits Act (S4390) by a 74‑4 vote and sent the measure to the governor.
The bill, also known as Assembly Bill 5165, removes the remaining $250 million in uncommitted tax credits that had been earmarked for artificial‑intelligence and data‑center projects under the state’s Next New Jersey Program.
It was introduced on June 1 and moved through both chambers in less than a month, a pace that Assemblyman Andrew Macurdy, a Democrat from the 21st Legislative District, praised as unusually rapid. “I commend Speaker Coughlin for recognizing this bill and giving it a speedy review,” Macurdy said. He also thanked Senate President Nicholas Scutari, the prime sponsor of the Senate version, and fellow Assembly sponsors Balvir Singh and Annette Quijano for pushing the bill forward.
The vote was largely bipartisan. In the Senate, only four members opposed the measure: Brian Bergen (R‑Denville), John DiMaio (R‑Hackettstown), Kevin Egan (D‑New Brunswick), and Aura Dunn (R‑Mendham). Two other senators, Alex Sauickie (R‑Jackson) and Mitchelle Drulis (D‑Raritan Township), did not vote.
Under the Next New Jersey Program, tax credits were originally set aside to attract large‑scale AI and data‑center investments. The End Data‑Center Tax Credits Act redirects the $250 million that had not yet been committed to other economic‑development priorities within the program. “AI data centers, backed by some of the wealthiest corporations and investors in the world, do not need additional subsidies on the backs of New Jersey taxpayers,” Singh said. “At a time when New Jersey families are struggling with rising electric bills, groceries, and the cost of everyday essentials, public dollars should be focused on providing relief to residents and investing in the infrastructure needed for a reliable and affordable energy future, not enriching billionaires.”
The decision reflects growing concerns about the environmental and infrastructural impact of large data‑center projects. Communities across New Jersey have raised objections to new data‑center development on the grounds of increased electricity demand, water consumption, strain on local infrastructure, and potential rises in utility rates. The bipartisan support for the bill indicates that these concerns have resonated with legislators from both parties.
The bill’s passage also signals a shift in the state’s approach to technology‑driven economic development. While the Next New Jersey Program continues to offer incentives for AI and other high‑tech industries, the removal of the remaining tax‑credit balance suggests a recalibration of priorities toward projects that directly benefit residents.
The Governor’s office has not yet released a statement on the bill. If signed, the measure will become law and the state will no longer offer the uncommitted tax credits to AI and data‑center developers. The change is expected to affect the state’s attractiveness to large technology firms, but proponents argue it will free up funds for other initiatives.
The legislation is part of a broader national conversation about the role of public subsidies in attracting data‑center investment. New Jersey’s decision may influence other states that have faced similar debates over balancing economic growth with environmental and utility concerns.
As the bill moves forward, stakeholders—including technology companies, local communities, and environmental groups—will watch how the state reallocates the redirected funds and whether the Next New Jersey Program will adjust its incentive structure to reflect the new priorities. The outcome of this legislative action will shape New Jersey’s economic‑development strategy for the coming years, potentially redefining the balance between attracting high‑tech investment and safeguarding public resources and infrastructure.
The bill, also known as Assembly Bill 5165, removes the remaining $250 million in uncommitted tax credits that had been earmarked for artificial‑intelligence and data‑center projects under the state’s Next New Jersey Program.
It was introduced on June 1 and moved through both chambers in less than a month, a pace that Assemblyman Andrew Macurdy, a Democrat from the 21st Legislative District, praised as unusually rapid. “I commend Speaker Coughlin for recognizing this bill and giving it a speedy review,” Macurdy said. He also thanked Senate President Nicholas Scutari, the prime sponsor of the Senate version, and fellow Assembly sponsors Balvir Singh and Annette Quijano for pushing the bill forward.
The vote was largely bipartisan. In the Senate, only four members opposed the measure: Brian Bergen (R‑Denville), John DiMaio (R‑Hackettstown), Kevin Egan (D‑New Brunswick), and Aura Dunn (R‑Mendham). Two other senators, Alex Sauickie (R‑Jackson) and Mitchelle Drulis (D‑Raritan Township), did not vote.
Under the Next New Jersey Program, tax credits were originally set aside to attract large‑scale AI and data‑center investments. The End Data‑Center Tax Credits Act redirects the $250 million that had not yet been committed to other economic‑development priorities within the program. “AI data centers, backed by some of the wealthiest corporations and investors in the world, do not need additional subsidies on the backs of New Jersey taxpayers,” Singh said. “At a time when New Jersey families are struggling with rising electric bills, groceries, and the cost of everyday essentials, public dollars should be focused on providing relief to residents and investing in the infrastructure needed for a reliable and affordable energy future, not enriching billionaires.”
The decision reflects growing concerns about the environmental and infrastructural impact of large data‑center projects. Communities across New Jersey have raised objections to new data‑center development on the grounds of increased electricity demand, water consumption, strain on local infrastructure, and potential rises in utility rates. The bipartisan support for the bill indicates that these concerns have resonated with legislators from both parties.
The bill’s passage also signals a shift in the state’s approach to technology‑driven economic development. While the Next New Jersey Program continues to offer incentives for AI and other high‑tech industries, the removal of the remaining tax‑credit balance suggests a recalibration of priorities toward projects that directly benefit residents.
The Governor’s office has not yet released a statement on the bill. If signed, the measure will become law and the state will no longer offer the uncommitted tax credits to AI and data‑center developers. The change is expected to affect the state’s attractiveness to large technology firms, but proponents argue it will free up funds for other initiatives.
The legislation is part of a broader national conversation about the role of public subsidies in attracting data‑center investment. New Jersey’s decision may influence other states that have faced similar debates over balancing economic growth with environmental and utility concerns.
As the bill moves forward, stakeholders—including technology companies, local communities, and environmental groups—will watch how the state reallocates the redirected funds and whether the Next New Jersey Program will adjust its incentive structure to reflect the new priorities. The outcome of this legislative action will shape New Jersey’s economic‑development strategy for the coming years, potentially redefining the balance between attracting high‑tech investment and safeguarding public resources and infrastructure.
