Data Centers and the Tax Trap | Lexington News

Lexington News Today | 2 Min News | The Daily News Now! · Aug 6, 2026 · 1m

Kentucky’s local governments are racing to lure big data centers with promises of massive tax revenue—but there’s a legal loophole that could erase those gains. If classified as manufacturing or industrial processing, these centers could snag sweeping tax breaks: sales tax exemptions on energy (a huge cost), full property tax waivers on equipment, and even 40-year industrial revenue bonds that make them effectively tax-exempt. The classification is legally uncertain and may head to court, turning the bait-and-switch into a potential disaster for school districts counting on the revenue. With…