Between 2000 and 2025, 38 U.S. states adopted tax incentives to attract data center investment. We provide causal evidence that these incentives increased state-level data center construction, with effects concentrated among large-scale facilities for cloud computing and, more recently, large language models. We develop a quantitative model endogenizing development location decisions and state tax incentives. The model implies strong fiscal competition among states: a coordinated repeal of incentives would improve total state-government welfare. It also implies large expected economic gains from data centers. We explore job market spillovers and find null results for data centers’ impact on local tech-related employment.