Democrats advance AI and data center tax proposals. Democrats in Congress have introduced about a half-dozen proposals to tax AI or roll back tax breaks for data centers (Bloomberg Government paywall) as concerns about the technology and its infrastructure become a midterm campaign issue. Senate Finance Committee ranking member Ron Wyden (D-OR) and Sen. Mark Warner (D-VA) have proposed limiting bonus depreciation for data centers. Some Republicans have also taken up the issue, including Sen. Josh Hawley (R-MO), who introduced legislation that would prevent data centers from receiving Opportunity Zone tax benefits. Recent polling from the Pew Research Center finds growing concern about data centers’ effects on household energy costs and tax revenues.
Meanwhile, Meta claims billions in research tax credits for AI data centers. Meta has used the federal research tax credit to reduce its tax bill by treating its AI data centers as experimental projects, according to The New York Times. The company has classified chips and other equipment used in the facilities as supplies for research and experimentation, helping reduce its 2025 tax bill by nearly $4 billion. Meta says it has invested about $200 billion in research over five years and is using tax incentives Congress created to encourage domestic investment. The company also has warned investors that the IRS could challenge some of its research tax credits.
Tax Notes investigates the spread of tax misinformation on social media. Social media has made it easier for promoters of misleading tax strategies to reach large audiences, according to Tax Notes (paywall). One example: Freedom Law School founder Peymon Mottahedeh argues that most Americans are not legally required to pay federal income taxes, a position courts have repeatedly rejected. Tax Notes identified at least four cases in which taxpayers associated with the school later served prison sentences for tax-related crimes. The IRS has reported a surge in questionable refund claims fueled by social media since 2022 and lists “misleading tax advice on social media” among its 2026 Dirty Dozen tax scams.
Judge orders NYC to redo pied-à-terre tax rollout. A New York state judge ruled that New York City must redo the rollout of its pied-à-terre tax (paywall), finding that the city improperly required homeowners to prove whether a property was their primary residence rather than making that determination itself. The ruling does not strike down the tax, which applies to second homes worth at least $5 million, and the city plans to appeal. The judge blocked further action on notices already sent to about 17,000 homeowners and directed the city to use tax records and other available information to identify properties subject to the surcharge. Separate lawsuits filed this week challenge the constitutionality of the tax itself.
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