Opportunity Zone data centers in Virginia

They intersect outside the traditional core: Virginia has the deepest data center demand in the country and full state tax conformity, but most Opportunity Zone capacity will sit in lower-income tracts away from Loudoun and Fairfax. An Opportunity Zone is a low-income census tract designated under IRC §1400Z-1. A Qualified Opportunity Fund (QOF) is a corporation or partnership that holds at least 90% of its assets in Opportunity Zone property, usually through a Qualified Opportunity Zone Business (QOZB) that owns and operates the real estate.² An investor who puts an eligible capital gain into a QOF within 180 days defers tax on it for up to five years, gets a 10% basis step-up at year five (30% in a rural fund), and pays no federal tax on the QOF's appreciation after a 10-year hold.²

For data centers, that matters most to projects with large, long-lived capital budgets: powered shells, campus infrastructure, substations and the mechanical and electrical plant. The complete guide to data centers in Opportunity Zones covers the federal rules in depth. This page covers what is specific to Virginia: the 2027 map, the state tax result, the incentive stack, Dominion and PJM power, and local politics.

The final list is not yet certified: Virginia's governor submitted nominations from a pool that Virginia REALTORS puts at 607 eligible tracts, and Treasury is still certifying state lists. Treasury's Rev. Proc. 2026-14 lists 25,332 eligible tracts nationwide, 8,334 of them wholly rural, and each governor may nominate up to 25% of a state's eligible tracts (or 25 tracts, if greater).¹ Virginia REALTORS reported in May 2026 that 607 Virginia tracts meet the new eligibility test and that the state would nominate approximately 152 new zones.³

A tract is eligible 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.¹ The Virginia Department of Housing and Community Development (DHCD) and the Virginia Economic Development Partnership (VEDP) ran the state process, surveying localities and holding webinars in April 2026 to gather priorities for the governor.⁴ Nominations were due within 90 days of July 1, 2026, with one 30-day extension available, and Treasury then has 30 days (extendable by 30) to certify.¹

Rural tracts deserve attention. A rural area is anywhere outside a city or town of more than 50,000 people and its adjacent urbanized area.⁵ A Qualified Rural Opportunity Fund (QROF), which holds 90% of its assets in zones made up entirely of rural area, earns a 30% basis step-up instead of 10%, and existing buildings in those zones need only 50% (not 100%) of their basis in improvements to be substantially improved.⁵ Much of Southside and Southwest Virginia, where land and transmission corridors exist but incomes are lower, is the natural place to look for rural tracts. See rural Opportunity Zones and how to check whether a property is in a zone.

Virginia follows the federal result: deferred gain is not in Virginia income until it is in federal income, and gain excluded after 10 years is excluded for Virginia too. Virginia's income tax starts from federal adjusted gross income. HB 29 (Chapter 7, 2026 Acts), signed February 20, 2026, fixes Virginia's conformity to the Internal Revenue Code as of December 31, 2025, after Public Law 119-21 was enacted on July 4, 2025.⁶ The bill decouples from specific items, including §168(n) expensing for qualified production property, §174A research expensing and the increased §179 limits, and keeps Virginia's existing exceptions such as its long-standing decoupling from bonus depreciation.^6,7 None of the published summaries we reviewed lists §1400Z-2 among the exceptions, and Novogradac's conformity tracker lists Virginia as fully conforming.⁸

Virginia taxes capital gains as ordinary income. The top rate is 5.75% on taxable income over $17,000.⁹ That is consistent with our state tax treatment of Opportunity Zone investments guide, which lists only California, North Carolina, Massachusetts (personal income tax), Mississippi and New York as clear decouplers.

In a QROF the step-up is 30%, so only $7,000,000 is included at year five: $1,666,000 federal and $402,500 Virginia. The larger value is the exclusion. If the QOF interest doubles to $20 million and is sold after 10 years, about $2.96 million of combined tax on the $10 million of appreciation disappears at these rates. For the full federal mechanics, see the Opportunity Zone tax savings example.

It is the largest in the world. Virginia's Joint Legislative Audit and Review Commission (JLARC) found that Northern Virginia holds about 13% of reported global data center operating capacity and 25% of capacity in the Americas, with roughly 80% of Virginia's industry in Loudoun, Prince William and Fairfax counties.¹² JLARC expects significant new growth outside Northern Virginia, along the I-95 corridor toward Central Virginia.¹²

Northern Virginia posted 467.6 MW of net absorption in the first half of 2026, the most of any primary North American market, and vacancy fell from 0.7% to 0.2%.¹⁰ On a statewide basis, Cushman & Wakefield counted 6.3 GW under construction in Virginia at the end of 2025, about a quarter of the Americas pipeline.¹³ Atlanta passed Northern Virginia in capacity under construction in CBRE's H1 2026 count, a sign of how power constraints are pushing growth elsewhere.¹¹

Demand drivers are cloud and AI tenants that want to be near the region's dense fiber and interconnection ecosystem, plus a large federal and defense customer base. The constraint is no longer tenants. It is power delivery, land with the right zoning, and local approval.

Yes, they stack: Virginia's sales and use tax exemption applies to qualifying equipment whether or not the site is in an Opportunity Zone, and the Opportunity Zone benefit applies to the investor's capital gain. The two operate on different taxpayers and different taxes.

The 2026 budget fight was about whether to end the exemption. Lawmakers kept it and added the electricity consumption tax instead, and the budget directs further study of data center taxation, so the exemption's future is a live question for projects that will buy equipment after 2028.^16,17 JLARC found the exemption saved companies $928 million in FY2023 and that about 90% of the industry used it.¹²

The distressed-locality threshold is where the overlap with Opportunity Zones is strongest. A locality with above-average unemployment and poverty is also more likely to contain eligible low-income tracts, so a project there may qualify for the lower $70 million exemption threshold and Opportunity Zone equity at the same time. The electricity tax, by contrast, is an operating cost that does not change with zone status. See state data center tax incentives and Opportunity Zones and combining Opportunity Zones with other incentives.

Hard, and it decides most siting outcomes. Most of the state's data center load is served by Dominion Energy Virginia inside the PJM Interconnection, the regional grid operator; Appalachian Power serves much of Southwest Virginia, and electric cooperatives serve parts of the north and center. Dominion said in 2024 that connecting new data centers above 100 MW could take one to three years longer than before, for total waits of up to seven years in Northern Virginia.²¹

• Large-load rate class: the State Corporation Commission's November 25, 2025 order created a new rate class for large users with stronger financial commitments.²⁰ Summaries describe it as covering loads above 25 MW with high load factors, with minimum payments of 85% of contracted transmission and distribution demand and 60% of generation demand, starting in 2027.¹⁹
• Transmission costs: in August 2026 the SCC ordered Dominion to develop a tariff assigning more transmission costs to data centers and other large loads.²³
• Capacity prices: PJM's 2027/2028 capacity auction cleared at the $333.44/MW-day cap, fell 6,623 MW short of the reliability requirement, and attributed 5,100 MW of the 5,250 MW forecast peak increase to data centers.²²
• Co-location: FERC directed PJM in December 2025 to create transmission services for load co-located with generation, a route some campuses are pursuing for on-site or adjacent supply.²⁸

For a QOZB, power timing interacts with the 31-month working capital safe harbor, which lets a business hold cash for a written development plan (up to 62 months with a second plan). Utility queue delays are not clearly the kind of governmental delay that extends that period, so a Virginia data center fund should phase equity to match energization dates, not land closings. See data center power timelines and the Opportunity Zone clock.

Local approval has become as important as power. Loudoun County voted 7 to 2 on March 18, 2025 to end by-right data center approvals, so new projects there need a special exception with public hearings.²⁴ In September 2026 Loudoun's board voted to move toward a pause of up to 12 months on acting on data center and substation applications that need legislative approval while it writes new standards, and other localities are weighing similar steps.²⁵ In Prince William County, the Court of Appeals upheld the voiding of the Digital Gateway rezoning on March 31, 2026 because of defective public notice, and the last developer abandoned the project in July 2026.^26,27

JLARC found that 55% of Fairfax County's data centers sit within 200 feet of residential zoning, compared with 24% in Loudoun, which explains much of the noise and visual pushback.¹² Water is a secondary but growing issue; closed-loop and air-cooled designs reduce draw and help with approvals. Land prices fall quickly outside Northern Virginia, but fiber routes and substation capacity thin out with them. For approach and sequencing, see community engagement for Opportunity Zone data centers and data center site selection inside Opportunity Zones.

Virginia residents get the full benefit, out-of-state investors get their own state's result, and Virginia landowners in eligible tracts hold a scarce combination of zone status and data center demand.

• Virginia investors: gains from any source can go into a QOF anywhere in the country, and Virginia follows the federal deferral and exclusion. The state benefit is 5.75% of the gain, deferred and partly stepped up.
• Investors elsewhere: your residence state decides state treatment. A California resident investing in a Virginia data center QOF gets the federal benefits only.
• Landowners: a parcel in a certified tract with a credible path to transmission is the asset. Selling land to a QOZB for cash is the simplest route; contributing land in exchange for a QOF interest is treated differently from investing a cash gain and has limits, so structure it with counsel. See Opportunity Zones for landowners.
• Developers: build the capital plan around energization, document working capital plans, and expect public hearings. See Opportunity Zones for data center developers.

OZ Data Centers sponsors funds that pair Opportunity Zone equity with power-first site selection, which in Virginia means looking past Loudoun to the tracts the 2027 map actually covers.