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HARRISBURG -- Taxes aimed at the tech industry are on the table as Pennsylvania lawmakers negotiate the upcoming budget and look for ways to help balance the commonwealth's shaky books.
Two options have been floated, including eliminating the state's sales tax exemption for purchases related to building and maintaining data centers. The commonwealth is projected to miss out on $2 billion in accumulated tax revenue by 2031.
The other proposal would extend the state's 5% gross receipts tax to firms that sell digital ads. That tax could bring in hundreds of millions of dollars a year in new revenue, although estimates vary.
Such a fiscal shot in the arm would aid policymakers as they tackle Pennsylvania's longstanding budgetary woes. The commonwealth is on track to spend around $5 billion more than it makes in revenue for this fiscal year. That kind of deficit spending has become routine in recent budgets, and led to cash reserves being halved from $14 billion two years ago to roughly $7 billion today.
Democratic Gov. Josh Shapiro has pitched a $53.3 billion budget that would send more money to the state's poorest schools and bump funding for struggling public transit systems. Although the proposal doesn't include any major new programs, it would still require the state to dip into its rainy day fund.
Tech taxes are a new direction for lawmakers stymied by partisan and ideological differences when trying to find new revenue -- a dynamic exacerbated by special interests. Efforts to regulate and tax recreational marijuana and slot-like skill games have foundered in recent years.
Supporters of creating a digital ad tax and ending the data center exemption argue the revenue would come out of the pockets of giant tech companies rather than small businesses and everyday Pennsylvanians.
"These are people who are making tremendous profit, record-breaking profit, right now. That's who should be paying this tax," said state Rep. Elizabeth Fiedler (D., Philadelphia), a vocal progressive and prime sponsor of the ad tax.
Tech taxes have also found support from individuals across the ideological spectrum.
Two conservative Republicans -- state Rep. Jamie Walsh of Luzerne County and Sen. Jarrett Coleman of Lehigh County -- have jointly introduced a bill to repeal the data center tax break and use the money to reduce the cost of gas.
In a memo seeking support, they said the state should not "continue to give a special tax incentive to the thriving data center industry." Coleman told Spotlight PA, "If [tech companies] are still dead set on showing up, they should have to pay down the gas tax for Pennsylvanians."
That tech firms are raking in dough isn't up for dispute. Amazon, Meta, and Google all made tens of billions of dollars in profit in 2025, per Forbes, and policies aimed at reining them in have become increasingly popular in both red and blue states.
It's unclear if that means Pennsylvania's divided state legislature will actually pass the tech measures on the table, but early signs indicate that both major parties are weighing the option.
A bill to levy the digital ad tax passed the Democratic-controlled state House 139-63 on Wednesday. It was unanimously amended to direct any revenue raised to provide property tax relief for older homeowners.
The bill is now with the state Senate. The upper chamber's majority leader, Joe Pittman (R., Indiana), didn't rule out an ad tax or an end to the data center exemption in an interview last week.
"There are concerns about that [data center sales] tax provision, and it's certainly possible that discussion on what the right approach is will unfold in the weeks ahead," Pittman said. He floated closing some unspecified sales tax exemptions as a revenue source in 2025.