TRENTON, N.J. — New Jersey has pulled the plug on the remaining $250 million in tax credits that had been reserved for artificial intelligence and data center projects, marking a sharp reversal from the incentive race that only recently had states competing aggressively to attract the industry.
Governor Mikie Sherrill signed the End Data Center Tax Credits Act on Thursday. The law takes effect immediately and cuts the Next New Jersey program from $500 million to $250 million.
That distinction matters because the first half of the money is already committed.
CoreWeave secured a $250 million award for its planned AI data center at the former Merck research campus in Kenilworth. NJEDA records show the project involves roughly $1.76 billion in capital investment, a 392,600-square-foot facility and 143 new full-time jobs, with business operations expected to begin in early 2027.
That award is untouched.
The other $250 million is gone from the program.
The credits do not disappear from the state’s broader economic-development pool. Because the money had originally been carved out of the Aspire and Emerge programs, the repeal effectively reallocates the unused balance back to those programs.
The move comes as New Jersey rewrites the rules around data center growth.
At the same time Thursday, Sherrill signed separate legislation requiring data center owners and operators to report their energy and water use every six months to the Board of Public Utilities. Those reports must include overall electricity consumption, cooling loads, information-technology loads, peak daily water demand, water sources and backup-power systems.
That builds on legislation Sherrill signed in July creating a separate ratepayer class for data centers and requiring them to shoulder the costs of their own energy demand and related grid infrastructure instead of spreading those costs across residential and small-business customers.
The shift is being driven by a simple political reality: data centers consume enormous amounts of electricity, and New Jersey has been trying to keep rising power costs from falling on households and businesses.
The backlash is not theoretical.
Residents in Vineland have complained about a persistent humming noise they attribute to a nearby AI data center, while Andover Township moved to prohibit data centers entirely after strong public opposition.
The message to developers is now very different from the one New Jersey sent two years ago.
The state still wants AI investment.
It just does not want taxpayers and ratepayers underwriting it the same way.
For companies considering the Garden State, that means future data center projects will increasingly have to stand on their own economics — paying their own power costs, absorbing more of the infrastructure burden and operating under far greater scrutiny from both the state and local communities.
Two years ago, states were competing to give data centers money.
New Jersey just showed how quickly that race can reverse.
JBizNews Desk | Trenton, New Jersey
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