Legislation- Data Centers
Data Center Investment Program (DCIP)- Paused
EXECUTIVE ACTION, Governor's Directive
The Illinois Data Center Investment Program, administered by the DCEO, offers significant tax incentives, including sales tax exemptions, to developers investing at least $250 million and creating 20+ jobs, fostering massive projects like the $12B Monarch Energy development in Rockford. While driving billions in investment, these incentives are undergoing review due to energy/water concerns and calls for greater sustainability.
On February 18, 2026, Governor Pritzker announced a two-year suspension of state tax incentives for new datacenter developments, effective July 1, 2026. The announcement came during his FY2027 budget address, signaling a dramatic shift from the state's previous growth-at-all-costs posture.
Governor's Seven Principles for Reform
CARRIED TO VETO SESSION
Alongside the pause, the Governor released a seven-part framework for veto session: a dedicated data-center electricity rate class with cost assignment; a pause on incentives; interruptible service tied to self-supplied clean energy; a requirement to build or pay for new clean energy; comprehensive water permits; generator emissions and cumulative-impact standards; and transparency measures including a ban on nondisclosure agreements with local governments and required community benefits agreements.
Hyperscale Data Centers (The POWER Act)
DID NOT ADVANCE, HB 5513 / SB 4016 · Rep. Robyn Gabel; Sen. Ram Villivalam
The Illinois POWER Act , introduced in early 2026, is proposed legislation designed to regulate data centers, requiring them to use renewable energy, pay for their own infrastructure, and adopt sustainable water usage. It aims to protect consumers from increased utility bills, manage power grid demand, and limit environmental impact.
Local Government, Data Center Siting
DID NOT ADVANCE, SB 1050 (SA 1) / SB 4206 · Sen. Darby Hills
Companion measures would let counties and municipalities regulate data-center siting within, and in the 1.5-mile radius around, municipal zoning jurisdiction, and set construction, water-protection, and noise standards. Under SB 1050 as amended, neither could allow a data center within 3 miles of another municipality's corporate boundaries without that municipality's prior written consent, with a public hearing required before any siting decision.
Energy and Water Reporting
DID NOT ADVANCE, SB 2181 / SB 3120 · Sens. Stadelman, Murphy
Would require annual energy and water reporting to the Illinois Power Agency and condition program eligibility on a water-stewardship strategy.
Would require annual energy and water reporting to the Illinois Power Agency and condition program eligibility on a water-stewardship strategy.
Incentives and Community Benefits
DID NOT ADVANCE, HB 3565 / SB 4203 · Rep. Slaughter; Sen. Rezin
Would add a construction-wage credit for projects in opportunity zones or owned by minority-, women-, or disability-owned businesses, and condition the program exemption on community benefit agreements with minimum host-community payments tied to property-tax relief.
Property, Operations, and Ownership
DID NOT ADVANCE, HB 4319 / HB 4989 / SB 3578 · Reps. Davis, Du Buclet; Sen. Rezin
Would create a compensation right for nearby property owners, require heat-reuse and liquid-cooling standards for large new facilities, and restrict foreign-adversary-owned data-center construction.