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OR — State Policy Updated January 2026

Oregon

Statewide incentives and compliance conditions, plus power and water constraints that affect data center siting.

Standard Enterprise Zone Property Tax Abatement Long-Term Rural Enterprise Zone Facilities Program Strategic Investment Program Large-Load Cost Allocation Enterprise Zone Compliance Water Rights Permitting Utility Regulation Water Constraints

Overview

Oregon provides three tiers of property tax abatements for data centers — ranging from 3-year standard breaks to 15-year exemptions for mega-projects — but recent legislation signals a shift in how the state balances economic development with residential electricity costs. The 2025 POWER Act (HB 3546) directs the Public Utility Commission to create a separate service class for data centers drawing 20 MW or more, requiring long-term contracts that allocate grid expansion costs to the facilities themselves rather than spreading those costs across all ratepayers.

Incentives

Standard Enterprise Zone Property Tax Abatement

Oregon’s standard enterprise zones offer a 3- to 5-year property tax abatement on qualified property for businesses locating or expanding in a designated zone.[1]

  • A 4- or 5-year abatement requires a school support fee and wage thresholds tied to county averages.
  • The abatement applies to local property taxes; state education property taxes remain due.

Long-Term Rural Enterprise Zone Facilities Program

Rural enterprise zones can grant a 7- to 15-year property tax abatement for qualifying facilities — longer than the standard program and targeted at larger projects in rural counties.[2]

  • Eligibility depends on investment size as a share of county real market value, location relative to Interstate 5, and hiring requirements within three years of operations.
  • The extended abatement requires a school support fee and wage thresholds in later years.

Strategic Investment Program (SIP)

SIP provides a 15-year property tax exemption on a portion of large capital investments by traded-sector businesses statewide.[3]

  • Minimum investment thresholds are $154.2 million statewide or $41.1 million in rural areas (indexed starting in 2025).
  • A base portion of project property remains taxable, with the taxable base growing 3% per year during the exemption period.
  • Projects must pay a community service fee equal to 25% of the annual tax savings, capped at $3 million per year (indexed starting in 2025).

Requirements and Conditions

Enterprise Zone Compliance

Standard enterprise zone exemptions require application before physical project work begins and involve a preauthorization conference with local officials.[1] Longer abatement periods add wage and school support fee conditions that function as ongoing compliance requirements.

Utility and Grid Rules

Large-Load Electricity Cost Allocation (HB 3546, 2025)

Oregon enacted HB 3546 (POWER Act), directing the Public Utility Commission to create a separate service class for large energy use facilities — defined as data centers (NAICS 518210) that use or can use 20 MW or more.[4]

  • The law requires tariffs or contracts that allocate the costs of serving these facilities to the facilities themselves and reduce cost-shifting risks to other ratepayers.
  • Electric companies must use contracts of 10 years or more with minimum payment obligations for large energy use facilities.
  • The commission must consider clean-energy targets and report biennially on large-load trends, with the reporting section sunsetting in 2035.

Water and Environmental Rules

Water Rights Permitting

New groundwater or surface water use requires a water use permit from the Oregon Water Resources Department, with development timelines and compliance terms.[5] Permits can require extensions, amendments, or mitigation depending on basin rules, which adds schedule and cost risk for water-cooled facilities.

What to Watch

  • PUC rulemaking on large-load tariffs: The POWER Act directs the commission to design tariffs and contract standards for the new 20 MW+ service class, with cost allocation and grid expansion financing decisions that will shape project economics going forward.
  • Residential rate impact scrutiny: The POWER Act is framed by legislators and state energy observers as a response to residential rate impacts and large-load growth from data centers, indicating continued scrutiny of cost allocation and grid expansion decisions.[6]

Sources

[1] Business Oregon, “Standard Enterprise Zone,” State of Oregon, n.d., https://www.oregon.gov/biz/programs/enterprisezones/StandardEnterpriseZone/Pages/default.aspx (accessed 2026-01-08).

[2] Business Oregon, “Long-Term Rural Enterprise Zone Facilities Program,” State of Oregon, n.d., https://www.oregon.gov/biz/programs/enterprisezones/Long-TermRuralEnterpriseZone/Pages/default.aspx (accessed 2026-01-08).

[3] Business Oregon, “Strategic Investment Program (SIP),” State of Oregon, n.d., https://www.oregon.gov/biz/programs/SIP/Pages/default.aspx (accessed 2026-01-08).

[4] Oregon Legislative Assembly, “HB 3546 (Enrolled), 2025 Regular Session,” 2025, https://olis.oregonlegislature.gov/liz/2025R1/Downloads/MeasureDocument/HB3546/Enrolled (accessed 2026-01-08).

[5] Oregon Water Resources Department, “Water Rights Permits,” State of Oregon, n.d., https://www.oregon.gov/OWRD/programs/WaterRights/Permits/Pages/default.aspx (accessed 2026-01-08).

[6] Oregon Capital Chronicle, “Bill to protect residential electricity customers from subsidizing data center demand moves forward,” 2025-06-05, https://oregoncapitalchronicle.com/2025/06/05/bill-to-protect-residential-electricity-customers-from-subsidizing-data-center-demand-moves-forward/ (accessed 2026-01-08).