Opportunity Zone data centers in Pennsylvania

Pennsylvania combines full state tax conformity, a large pipeline of power-first data center campuses and a new zone map that will be certified for January 1, 2027. An Opportunity Zone is a low-income census tract designated by the governor and certified by Treasury. Investors who put capital gains into a Qualified Opportunity Fund (QOF) within 180 days get deferral for up to five years, a 10% basis step-up after five years (30% for a Qualified Rural Opportunity Fund), and tax-free appreciation after a 10-year hold under IRC §1400Z-2.¹

Pennsylvania's data center boom has concentrated on sites with power already in the ground: the Susquehanna nuclear plant in Luzerne County, retired coal plants at Homer City and Shippingport in western Pennsylvania, and former steel land in Bucks County.^2,3,4 Many of those places are former industrial communities, which is why the 2027 zone map matters for data center investors.

Up to 218 of the 871 eligible tracts, chosen by Gov. Shapiro through the Department of Community and Economic Development (DCED) and certified by Treasury. Rev. Proc. 2026-14 set out the nomination procedure and the national list of 25,332 eligible low-income community tracts, 8,334 of them wholly rural.⁷ A tract qualifies if its median family income is no more than 70% of the area median, or if its poverty rate is at least 20% and its median family income is no more than 125% of the area median; a state may designate no more than 25% of its eligible tracts.^7,8

Until Treasury certifies the list, treat DCED's map as proposed. A tract that is a zone today is not automatically renominated, so a site that qualifies today may not qualify for investments made after 2026.⁸ To check a parcel, use the methods in how to check if a property is in an Opportunity Zone, and see the new Opportunity Zone maps for 2027.

Rural tracts carry extra benefits. A fund that holds at least 90% of its assets in zones made up entirely of rural area is a Qualified Rural Opportunity Fund (QROF), and its investors get a 30% step-up after five years. In those zones an existing building is substantially improved when improvements exceed 50% of its basis rather than 100%.⁹ Much of central and western Pennsylvania outside the Pittsburgh, Philadelphia, Allentown, Harrisburg and Scranton areas is rural under the statutory test, which excludes cities of more than 50,000 people and their adjacent urbanized areas. See qualified rural opportunity funds.

No, not while the gain is deferred federally, and not on appreciation excluded after 10 years. Pennsylvania's personal income tax does not start from federal taxable income, so conformity comes from a specific statute: Act 13 of 2019 defines "net gains," "net losses" and "dividends" to leave out amounts excluded from federal income under the Opportunity Zone rules, for tax years beginning after December 31, 2019.^11,12 The Department of Revenue states that such amounts are also excluded from Pennsylvania personal income tax.¹¹

The benefit reaches Pennsylvania residents for all of their QOF investments and nonresidents for investments in Pennsylvania zones, according to practitioner analysis of the act.¹² Because the statute ties Pennsylvania's treatment to amounts excluded federally, the current federal rules (rolling five-year deferral and 10% or 30% step-ups for gains invested after December 31, 2026) should flow through. The Department's guidance does not spell out every detail of the new rules, so confirm the year-five inclusion with your tax adviser.

Pennsylvania taxes all classes of income, including net gains from property, at a flat 3.07%, with no separate rate for long-term gains.¹³ The worked example assumes that rate still applies when the deferred gain is included.

This puts Pennsylvania among the conforming states in state tax treatment of Opportunity Zone investments. Investors who live in a nonconforming state, such as California, pay their own state's tax on the gain in the year of sale even if the QOF builds in Pennsylvania.

Pennsylvania's largest projects are power-first campuses at nuclear plants, retired coal plants and former steel sites, not a single metro cluster. In June 2025 Amazon announced at least $20 billion of investment, starting with campuses in Salem Township, next to the Susquehanna nuclear plant in Luzerne County, and in Falls Township, on the former U.S. Steel property at the Keystone Trade Center in Bucks County.²

• Susquehanna (Luzerne County): Talen Energy and Amazon moved to a front-of-meter power purchase agreement ramping to 1,920 MW by 2032 and running through 2042, with PPL providing transmission and delivery, after FERC rejected an amended interconnection agreement that would have raised co-located load from 300 MW to 480 MW.^14,15
• Homer City (Indiana County): a former coal plant site of more than 3,200 acres planned as a 4.5 GW gas-fired data center campus with seven GE Vernova turbines.³ Local reporting in August 2026 said the roughly $10 billion redevelopment began construction this year.¹⁶
• Shippingport (Beaver County): Aligned Data Centers broke ground in 2026 on a 2 GW campus at the former Bruce Mansfield coal plant site, planned to run on dedicated on-site power rather than the local grid.⁴
• Crane Clean Energy Center (Dauphin County): Constellation is restarting the 835 MW unit formerly known as Three Mile Island Unit 1 under a 20-year agreement with Microsoft.¹⁷
• Pittsburgh region: developers have proposed hyperscale data centers in nearly every county in the region, and projects in Springdale, Shippingport and Upper Burrell had cleared some hurdles but still needed further approvals as of August 2026.¹⁶

Demand is coming from hyperscale cloud and AI build-outs looking for power that can be delivered this decade. PPL Electric, which serves central and eastern Pennsylvania, reported 31.8 GW of data center load in advanced planning in the second quarter of 2026, with more than 11 GW under signed agreements and more than 6.5 GW under construction.⁶

The main state incentive, a sales and use tax exemption on computer data center equipment, is still law but now comes with conditions. Since January 1, 2022, equipment used in a certified data center by an owner, operator or qualified tenant holding a certificate of exemption has been exempt from Pennsylvania's 6% sales and use tax.¹⁸ Certification requires new investment of at least $75 million and 25 new jobs in a county of 250,000 or fewer people, or $100 million and 45 new jobs in a larger county.¹⁹ Spotlight PA reported that the exemption is projected to cost close to $2 billion by 2031, including $188.4 million in fiscal 2026-27.²⁰

• Executive Order 2026-05, signed August 18, 2026, directs the Department of Revenue to deny the exemption to applicants that do not meet the Governor's Responsible Infrastructure Development (GRID) requirements, removes data centers from the PA Permit Fast Track Program and bars nondisclosure agreements on data center projects.²¹
• The GRID requirements ask developers to protect energy affordability, engage local communities, create family-sustaining jobs and meet environmental standards, including annual electricity and water reporting.²²
• In June 2026 the House passed bills to let municipalities adopt 180-day moratoriums on data center applications (201-1) and to put the GRID standards into law (134-68).²³ Repeal of the exemption also drew broad support, but none of these measures had been enacted when the budget was signed in July.²⁴

Because these incentives reduce different taxes, they generally stack with OZ equity. The exceptions are structures where a public authority holds title, which need a separate review under the QOZB ownership and lease rules. See state data center incentives and Opportunity Zones and stacking incentives with Opportunity Zones.

Pennsylvania has generation and transmission, but grid capacity is tight and utilities now shift more cost and risk onto large loads. The state is in PJM, whose 2028/2029 capacity auction cleared at the $325 per MW-day cap and fell 6,831 MW short of the reliability requirement, with the higher load forecast driven largely by large loads.²⁵

• The Public Utility Commission issued a final order in May 2026 establishing a model large-load tariff for customers above 50 MW individually or 100 MW in aggregate, with collateral and financial security to reduce stranded-cost risk. It is guidance for utilities such as PPL, PECO and Duquesne Light; each utility's own tariff sets the binding terms.²⁶
• FERC found PJM's tariff unjust and unreasonable in December 2025 for lacking clear rules for co-located load and ordered new transmission services, including interim non-firm service, firm contract demand and non-firm contract demand.²⁷
• The Susquehanna deal shows the practical result: rather than sit behind the plant's meter, the Amazon campus buys nuclear output through a front-of-meter contract with grid delivery.¹⁴

For an Opportunity Zone fund, the clock is the issue. A QOZB can hold cash for up to 31 months under a written working capital plan, or 62 months with consecutive plans, but utility study and construction delays are not clearly the governmental delays that extend that period. Sites with signed service agreements or permitted on-site generation fit far better. See power interconnection for Opportunity Zone data centers and the working capital safe harbor.

Former power plant, steel and mill sites in eligible tracts are the strongest fits, because they bring transmission, water rights and industrial zoning. Western Pennsylvania's coal and steel towns and the river valleys of the northeast often have the income profile that qualifies for designation, while the suburbs around Philadelphia and Pittsburgh mostly do not.

• Water: river sites on the Susquehanna, Ohio, Allegheny, Monongahela and Delaware have supply, but large consumptive uses go through basin commission review. Closed-loop cooling reduces the issue. See water and cooling.
• Fiber: the Philadelphia and Pittsburgh corridors have dense routes; rural power-plant sites usually need new diverse fiber, which belongs in the capital budget.
• Land: large former industrial parcels are available, and a building on one can count as original use if newly built, or meet the 50% rural substantial-improvement threshold if reused in a wholly rural zone.
• Local approval: projects in Springdale, Shippingport and Upper Burrell still needed further local approvals in August 2026, and House-passed legislation would let municipalities pause data center applications for 180 days.^16,23

Cost scale matters for fund design. Cushman & Wakefield puts all-in greenfield cost at about $8.9 million to $23.3 million per MW, before chips.²⁸ A single-tenant powered shell leased triple-net to a hyperscaler is the weakest Opportunity Zone structure, because merely entering into a triple-net lease is not an active trade or business; operator-run and colocation models fit the rules better. See data center lease structures.

• Pennsylvania investors with capital gains: you defer the 3.07% state tax with the federal tax and get the 10-year exclusion for both, wherever the QOF invests.
• Investors outside Pennsylvania: your home state controls your state deferral; a Pennsylvania project helps you mainly through its economics, and nonresidents investing in Pennsylvania zones also get Pennsylvania's exclusions.
• Landowners near transmission or a retired plant: a 2027 zone designation can widen your buyer pool, and your own gain on a sale can go into a QOF within 180 days. See Opportunity Zones for landowners.
• Developers: plan for GRID compliance if you want the sales tax exemption, budget for large-load tariff collateral, and expect local hearings to set the schedule as much as engineering does.

OZ Data Centers sponsors funds that develop data centers in Opportunity Zones, and Pennsylvania's former power plant sites are a clear example of where zone status, power and land can line up. Where the answer depends on your own tax position, confirm it with your tax adviser.