New Jersey should never have been in the business of subsidizing data centers, which have increased utility rates and imposed costs on communities up and down the state. NJPP thanks the bill sponsors and legislative leadership for the proposal in A5165 to end the brief, costly Next New Jersey AI tax credit.
But this change comes too late for the $250 million already lost to this program, sending taxpayer dollars to subsidize the industry causing cost increases and straining state infrastructure. As NJPP laid out in its March 2026 report, Fool’s Gold: The Hidden Costs of AI Data Centers for New Jersey, data centers accounted for 70 percent of the growth in electricity demand. And this loss of revenue comes at a time when state government is in need of new revenues simply to meet current program costs for the schools, health care, and transit funding the state’s residents depend on.
The Next New Jersey AI tax credit should serve as a cautionary tale for lawmakers. The bill authorizing the creation of the credit was overwhelmingly passed by both houses, including unanimous passage in the Senate, despite few guardrails on the program and a substantial sticker price of $500 million.
As corporate tax credits come up for creation, extension, or expansion, whether for the film industry or real estate developers or the next hot industry, NJPP urges the legislature to apply a proper degree of skepticism to the promises of corporations to demand a tighter set of regulations before issuing these credits. Otherwise, it will be the public on the hook once more for the cost of these corporate subsidies, without receiving the promised benefits.
