A new state law sponsored by Summit Assemblyman Andrew Macurdy eliminates $250 million in state tax credits for AI data centers in New Jersey.

Gov. Mikie Sherrill signed the End Data Center Tax Credits Act on Friday, Aug. 28, according to TAPinto Summit. The law cancels the remaining half of a $500 million incentive pool created under the state's Next New Jersey corporate tax credit program in 2024.

The first $250 million from that program already went to CoreWeave, which plans a $1.8 billion AI data center at the former Merck campus in Kenilworth. That award stays intact. The new law blocks any future credits from the remaining pot.

State legislative records show the bill, A5165/S4390, passed both chambers on June 30 with overwhelming bipartisan support. The Senate approved it 35-4. The Assembly voted 74-4.

Macurdy, a Democrat representing the 21st Legislative District who previously served as a federal prosecutor in Newark, said in a statement that New Jersey residents should not be subsidizing large AI data centers in 2026. He called the legislation a common-sense step to save $250 million in state taxpayer resources.

Summit's own data center ban

The state law follows Summit's own prohibition on AI data centers, which the Common Council built over two votes this summer.

The council first adopted a ban on June 16 at a meeting that drew a large crowd and extensive public comment, NJ21st reported. That initial ordinance defined an AI data center using a 20-megawatt power threshold. Some officials and residents questioned whether the threshold could let smaller facilities slip through.

The Summit Planning Board then reviewed proposed changes on June 29. City planner Joe Burgess told the board that data centers generate roughly one job per 5,000 square feet, far fewer than traditional office buildings.

"While data centers can generate a lot of construction jobs, once that's built, there's no jobs," Burgess said at the June 29 meeting, as Patch reported.

The council adopted a follow-up ordinance on July 28 that removed the megawatt threshold entirely and clarified the citywide ban. The revised ordinance also reduced the maximum size for accessory server rooms from 15,000 square feet to 12,000 square feet. The city cited infrastructure and long-term planning concerns in the ordinance text.

What the law does and doesn't do

The new state law does not affect CoreWeave's Kenilworth project or its $250 million award from the New Jersey Economic Development Authority (NJEDA). It eliminates only the uncommitted credits.

Macurdy's office said the bill reflects growing concern that large AI data centers raise utility rates for residents and create environmental and quality-of-life problems.

The New Jersey Business and Industry Association opposed the measure, according to TAPinto. The state Office of Legislative Services said the law will not generate new state revenue.

Sherrill also signed a separate bill on Friday, Aug. 28 requiring data centers to report their energy and water use twice a year.