At least 27 data centers in Illinois have received incentives totaling an estimated $983 million in lifetime tax breaks and benefits, according to a state report from 2024. Governor J.B. Pritzker has now proposed a two-year pause on new tax credits for data center projects, responding to rising electricity demand and the consumer price increases that follow it.
The proposal arrives alongside the POWER Act, a piece of legislation working its way through the state capitol that would require data centers to pay for their own energy and infrastructure from renewable sources. The bill also mandates transparency about water use and requires water permits from the Illinois EPA. It has not yet left committee, but political will for data center regulation is growing.
The legislative push is running in parallel with community-level opposition across the state. In Pekin, the mayor stated that "it has become clear that many in our community have serious concerns about whether this project fits Pekin," and concluded that "at this time, it is not the right project for Pekin." In Joliet, where the city council is considering plans for a facility called the Joliet Technology Center near Bernhard and Rowell, one resident presented nearly 5,000 petition signatures against the project.
Residents across the Chicago area have cited concerns about water consumption, electricity costs, and noise. Several communities have already rejected data center proposals, and those rejections have emboldened opposition in neighboring towns.
Sen. Steve Stadelman, D-Caledonia, framed the concern directly: "We don't want them to overwhelm our electrical capabilities and our water resources."
Data center operators have responded with a familiar warning. Unfavorable state policies, combined with Illinois's existing biometric privacy law, could drive facilities to Wisconsin, Indiana, or other Midwestern states competing for the same investment. The Illinois Manufacturers' Association has characterized the POWER Act as "penalizing innovation."
The argument has worked before. States that imposed early restrictions on data center development watched projects relocate to more permissive jurisdictions. But the political calculus has shifted. Consumer advocacy groups are now organized around electricity price impacts, and the visibility of data center water consumption has increased significantly over the past two years. The cooling dimension matters here directly: a facility's choice of thermal management technology determines its water footprint, and that footprint increasingly determines whether a project gets built.
Illinois joins a growing list of states where the regulatory environment for data centers is tightening. Over 300 data center bills were filed across more than 30 states in the first six weeks of 2026 legislative sessions. The era of frictionless permitting, generous tax abatements, and minimal scrutiny of resource consumption appears to be closing. Operators planning new builds in the state should factor in the possibility that the POWER Act, or something like it, passes before their facilities come online.