Data centers along Utah's Silicon Slopes corridor may give homeowners a short-lived property tax break that reverses itself within a few years, according to new University of Utah research.

A Kem C. Gardner Policy Institute study released in August describes what researchers call a "boomerang effect." Under Utah's Truth in Taxation system, a new data center's building counts as new construction and initially lowers the certified tax rate for surrounding property owners. But the center's personal property, including servers and GPUs worth three to four times the building's value, depreciates rapidly and does not count as new growth. As that equipment loses value, the tax rate creeps back up.

The numbers are stark.

The Gardner Institute modeled a hypothetical data center spending $1 billion on GPUs in its first year. Under Utah State Tax Commission depreciation schedules, that valuation drops to $620 million after year one, then to $460 million, $210 million, $90 million and $70 million over five years.

Maddy Oritt, director of public finance research at the Gardner Institute and a study co-author, told the Deseret News that the effect hits hardest in rural counties with small tax bases. A $2 billion data center would represent only about 1% of Salt Lake County's tax base but would more than double San Juan County's. Utah County, home to Lehi and the Silicon Slopes corridor, falls between those extremes, though no county-specific figure was published.

Oritt told the Deseret News the tax rate "is not going to ever exceed what property taxpayers were paying before" a data center arrives, even as it climbs back after the initial dip. Phased equipment replacement, such as swapping out 20% of hardware each year, would smooth the swings. Utah has not enacted legislation requiring data centers to replace hardware on a set schedule, though the Tax Foundation found five-year refresh cycles have become an industry norm nationally.

The study also flagged that data centers inside tax increment financing zones, where property tax revenue funds the development project itself rather than going to local governments, generate no new revenue for local taxing entities during the project's duration.

Utility costs are a separate concern. Shon Hiatt, an associate professor at the University of Southern California, told a Utah legislative interim committee on Aug. 19 that investor-owned utilities like Rocky Mountain Power saw no rate impact from data centers between 2020 and 2025, the Deseret News reported. But he warned the pattern may not hold.

"I would expect data centers coming in now, especially these larger ones, to have an impact on power prices wholesale," Hiatt said at the Aug. 19 hearing, according to the Deseret News.

Utah's 2025 Senate Bill 132 (SB 132) addresses part of that risk by allowing companies needing 100 megawatts or more to build their own off-grid generating stations. Michele Beck, director of Utah's Office of Consumer Services, called SB 132 one of the "best ideas out there" nationally for protecting power customers, according to a Grist/Salt Lake Tribune report.

Data center construction in Utah is accelerating. As of late 2025, the state had 47 facilities consuming nearly 600 megawatts of power, according to Deseret News reporting citing Baxtel data. Near-term growth in the Salt Lake region was estimated at 699%. In neighboring Eagle Mountain, the QTS data center spans 193 acres with 177 megawatts of planned capacity, Meta employs over 300 people at its campus, and Google owns 300 acres where energy constraints have delayed construction, as ABC4 reported.

Oritt questioned whether tax incentives make sense in employment centers like Lehi. She told the Deseret News that development in population centers is almost certain to happen with or without incentives, and that "if a data center weren't to locate there, it's almost certain that other development would happen there."

The Legislature's Economic Development and Workforce Services Interim Committee heard presentations on the issue Aug. 19. No follow-up hearing date has been announced.