Tax Incentives for Data Centers

Summaries of data center tax incentives by state offer insights into available opportunities. Companies often lobby individually, but the list below outlines key incentives by market.

ALABAMA
The state offers up to 30 years of tax breaks for data centers investing $400 million and creating at least 20 jobs with an average annual compensation of $40,000. Please visit the Alabama Department of Revenue website for more information.

ALASKA
No known data center tax incentive; however, there is no state-wide sales tax.

ARIZONA
Arizona’s Computer Data Center Program, administered by the Arizona Commerce Authority (ACA), provides two primary tax exemptions for data center developers: Transaction Privilege Tax (TPT) Exemption and Use Tax Exemption. The exemptions apply to purchases of qualifying equipment and infrastructure. Certification is valid for 10 or 20 years depending on project type.  For more information, visit Arizona State Data Center Sales Tax Incentives.

ARKANSAS
Arkansas offers incentives as outlined by Act 819 and Act 548.

CALIFORNIA
No known data center tax incentive.

COLORADO
No known data center tax incentive.

CONNECTICUT
Connecticut offers tax incentives for qualified data center developers through its Data Center Tax Incentive Program, administered by the state’s Department of Economic and Community Development (DECD). Information is available on the DECD website.

DELAWARE
No known data center tax incentive; however, the state has no property or sales tax.

FLORIDA
Florida offers a state-level sales and use tax exemption specifically for data center property, detailed in official resources from the Florida Department of Revenue (FDOR). As of June 30, 2025, a new state law limits the exemption to data centers with 100 MW or greater IT load, effective August 1, 2025.

GEORGIA
Georgia offers a sales tax exemption for equipment in data centers investing $100 million to $250 million, depending on the county’s population and whether the facility is single-user or co-located. The investment threshold varies based on the population size of the county where the data center is located. For more information, visit Georgia State Data Center Tax Incentives.

HAWAII
No known data center tax incentive.

IDAHO
Idaho offers a state-level sales tax exemption for qualifying data center developments. For more information, visit the Idaho Commerce website.

ILLINOIS
The Illinois Data Center Investment Program, administered by the Department of Commerce and Economic Opportunity (DCEO), provides a comprehensive package of tax exemptions and credits to qualifying data centers. These incentives are aimed at fostering job creation, encouraging capital investment, and promoting environmentally sustainable operations to ultimately support expanding digital opportunities and create tax and economic advantages for nearby communities. For more information, visit Illinois State Tax Incentives.

INDIANA
Indiana offers a state-level sales and use tax exemption for data center developers, administered by the Indiana Economic Development Corporation (IEDC). The Data Center Gross Retail and Use Tax Exemption provides a sales and use tax exemption on purchases of qualifying data center equipment and energy to operators of a qualified data center for a period not to exceed 25 years for data center investments of less than $750 million. If the investment exceeds $750 million, the IEDC may award an exemption for up to 50 years. For more information, visit the Indiana EDC website.

IOWA
Iowa offers sales tax breaks to data centers investing as little as $1 million, with larger incentives for projects topping $200 million. It also has no property tax on equipment. More information is available on the Iowa Department of Revenue website.

KANSAS
Kansas offers a 20-year state and local sales and use tax exemption for qualified data centers under SB 98, administered by the Kansas Department of Commerce. Visit the Kansas Department of Commerce website for more information.

KENTUCKY
Kentucky provides a sales and use tax exemption for qualified data center projects, with investment thresholds based on county population and expanded eligibility under House Bill 775 (2025). The Kentucky Department of Revenue website provides more information.

LOUISIANA
Louisiana offers a major incentive for data center development through a sales and use tax rebate on qualified equipment and construction costs, as enacted by Act 730. To qualify, projects must invest at least $200 million, create 50 permanent jobs, and be certified by Louisiana Economic Development. The rebate can last up to 20 years, with a possible 10-year extension, making it highly attractive for large-scale data centers.

MAINE
Maine offers a sales tax refund or exemption for qualified data center projects under 36 M.R.S. § 2021. To qualify, the facility must be at least 20,000 sq ft, primarily used for housing servers, and include eligible infrastructure such as power systems and server equipment installed after October 1, 2018. This incentive significantly reduces upfront costs for large-scale data center development in the state.

MARYLAND
Maryland offers a sales and use tax exemption for qualified data centers through its Data Center Maryland program. Projects must invest at least $2–$5 million in qualified equipment (depending on location) and create five new full-time jobs to receive a 10-year exemption, with larger projects investing $250 million eligible for up to 20 years. Certification by the Maryland Department of Commerce is required, making this a strong incentive for both mid-sized and hyperscale data centers. Visit the Maryland Department of Commerce website for more information.

MASSACHUSETTS
Massachusetts provides a 20-year sales and use tax exemption for qualified data centers under its Data Center Tax Exemption program. To qualify, a facility must be at least 100,000 sq ft, invest $50 million in construction and equipment within 10 years, and maintain 100 jobs. The exemption applies to purchases of servers, networking gear, software, electricity and construction materials. More information is on the Massachusetts Office of Economic Development website.

MICHIGAN
Michigan offers a sales and use tax exemption for enterprise data centers certified by the Michigan Strategic Fund. To qualify, projects must invest at least $250 million, create 30 full-time jobs paying 150% of the regional median wage, and meet clean energy and green building standards. The exemption applies to equipment and construction costs and is available through 2050 (or 2065 for certain redevelopment sites). The Michigan Economic Development Corporation website offers more information.

MINNESOTA
Minnesota offers data centers of at least 25,000 sq ft and costing at least $30 million a 20-year sales tax exemption on equipment and energy and a permanent property tax exemption on equipment. Visit the Minnesota Employment and Economic Development website for more information.

MISSISSIPPI
Mississippi offers a sales and use tax exemption for certified data centers through the Mississippi Development Authority (MDA). To qualify, projects must invest at least $20 million, create 20 full-time jobs paying 125% of the state’s average wage, and be certified by MDA. The exemption covers computing equipment, software, construction materials, and utilities, providing up to 10 years of significant tax breaks for new or expanding data centers.

MISSOURI
Missouri offers sales tax exemptions to new data centers investing at least $25 million and employing at least 10 people in well-paying jobs. Existing data centers can qualify by investing at least $5 million and adding five well-paying jobs. Visit the Missouri Department of Economic Development website for more information.

MONTANA
Montana offers a property tax reduction for large data centers under its Class 17 classification. To qualify, a facility must have at least 25,000 sq ft and invest $50 million in land, improvements, and equipment within 48 months. The incentive lowers the taxable value to 0.9% initially, gradually increasing over 10 years. Visit the Montana Department of Revenue website for more information.

NEBRASKA
Nebraska offers a sales and use tax exemption under state law (Neb. Rev. Stat. § 77‑2704.62), administered by the Department of Revenue, which applies to qualifying equipment, software, and construction materials used in data center operations.

NEVADA
Nevada offers some of the most attractive incentives for data centers in the U.S., including sales and use tax abatements reducing rates to as low as 2% and up to 75% personal property tax abatements for 10–20 years. To qualify, projects must meet investment thresholds (at least $25M for 10-year abatements or $100M for 20-year abatements), create local jobs at competitive wages, and use Nevada-based construction labor. Applications are actively accepted through the Governor’s Office of Economic Development.

NEW HAMPSHIRE
No known data center tax incentive; however, there is no state-wide sales tax.

NEW JERSEY
New Jersey offers one of the most competitive programs for large-scale AI and data center projects through the Next New Jersey Program – Artificial Intelligence (AI), administered by the New Jersey Economic Development Authority (NJEDA). This initiative provides up to $250 million in tax credits for qualifying investments, making it a major incentive for companies building advanced data centers in the state. Additional financing and development incentives are also available through NJEDA’s broader programs.

NEW MEXICO
No known data center tax incentive.

NEW YORK
New York provides a sales tax exemption, administered by the Department of Taxation and Finance, for equipment used by Internet data centers.

NORTH CAROLINA
North Carolina currently provides a sales and use tax exemption for electricity and certain equipment used at “Qualifying Data Centers” that invest at least $75 million in private funds within five years. Projects must receive a written determination from the Secretary of Commerce and meet wage and health insurance requirements. This exemption covers critical infrastructure such as servers, networking gear, HVAC systems, and power equipment.

NORTH DAKOTA
North Dakota offers a sales and use tax exemption for enterprise IT equipment and software used in a “qualified data center”—defined as a newly constructed or substantially refurbished facility (at least 15,000 sq ft with ≥50% data-processing area) after December 31, 2020.

OHIO
Ohio offers sales tax abatement for data centers that invest at least $100 million and creates annual payroll of $1.5 million or more. There is also no tax on tangible personal property in the state for general business filers. For more information, visit Ohio State Data Center Tax Incentives.

OKLAHOMA
Oklahoma provides a sales tax exemption for equipment bought by businesses engaged in computer services or data processing, so long as most of the revenue comes from out-of-state sales. For more information, visit the Oklahoma Tax Commission website.

OREGON
Oregon does not have a state sales tax, so there is no sales tax exemption for data center equipment. Instead, the state offers strong property and income tax incentives, including Enterprise Zone abatements, the Strategic Investment Program for large projects, and the Oregon Investment Advantage, which can provide multi-year tax incentives. These programs make Oregon highly competitive for data center development, especially in rural areas.

PENNSYLVANIA
Pennsylvania offers a sales and use tax exemption for qualified data center equipment under the Computer Data Center Equipment Program, requiring certification from the Department of Revenue. Additionally, businesses can benefit from Keystone Opportunity Zones (KOZs), which provide significant state and local tax breaks—including property, income, and sales taxes—for facilities located in designated areas. These programs make Pennsylvania competitive for data center development.

RHODE ISLAND
No known data center tax incentive.

SOUTH CAROLINA
South Carolina offers a sales and use tax exemption for certified data centers on equipment, hardware, and electricity, provided they invest at least $50 million and create 25 full-time jobs paying 150% of the county’s per capita income within five years. Certification from the Department of Commerce is required before claiming the exemption. These incentives make South Carolina attractive for large-scale data center projects. Visit the Development District Association of Appalachia website for more information.

SOUTH DAKOTA
South Dakota has no specific data-center incentives but has offered aid to at least a couple of data-center projects through its general economic development programs.

TENNESSEE
Tennessee offers a sales and use tax exemption for qualified data centers on equipment, software, and infrastructure, plus a reduced 1.5% tax rate on electricity used in operations. To qualify, projects must invest at least $100 million and create 15 full-time jobs paying 150% of the state’s average wage. Additional incentives include FastTrack grants, job tax credits, and industrial machinery credits through the Tennessee Department of Economic and Community Development.

TEXAS
Texas offers a sales tax exemption on equipment and electricity for data centers that contain at least 100,000 sq ft in a single building or portion of a building, invest at least $200 million over a five-year period starting from certification and employ at least 20 people (in the county where the facility is not located and not relocated from another county) at above-average wages. For more information, go to Texas State Data Center Tax Incentives.

UTAH
Utah offers a sales and use tax exemption for qualifying data centers (minimum 150,000 sq. ft.) on machinery, equipment, and maintenance parts, benefiting both operators and tenants. The state also provides Economic Development Tax Increment Financing (EDTIF) and Rural EDTIF incentives, along with infrastructure tax credits for large-scale projects. Visit the Governor’s Office of Economy Opportunity website for more information.

VERMONT
No known data center tax incentive.

VIRGINIA
Virginia offers a sales tax exemption for data center equipment to those data centers that qualify by meeting both a capital investment and employment threshold. For more information, visit Virginia State Data Center Tax Incentives.

WASHINGTON
Washington offers a sales and use tax exemption for qualifying data centers on server equipment, power infrastructure, and related installation services. Expanded under HB 1846 (2022), the program now includes both rural and urban counties, with limits on the number of certificates issued annually. These incentives make Washington attractive for large-scale data center projects while the state continues to review their economic and environmental impacts.

WEST VIRGINIA
In 2025, West Virginia enacted new legislation creating significant tax incentives for qualifying data centers, including a sales and use tax exemption on equipment and special property tax treatment that values data center equipment at salvage value (about 5%) for ad valorem tax purposes. Because these incentives were only recently passed, state agencies have not yet published a consolidated public-facing summary, so no official agency website currently exists that reflects the full, updated 2025 provisions

Visit the West Virginia Department of Economic Development website for more information.

WISCONSIN
Wisconsin offers a state sales and use tax exemption for qualified data centers, covering equipment and materials used to construct, operate, or renovate these facilities, once the project is certified by the Wisconsin Economic Development Corporation (WEDC). To qualify, projects must meet significant investment thresholds ranging from $50 million to $150 million, depending on county population.

WYOMING
Wyoming offers data centers that invest at least $5 million a sales tax exemption on computer equipment. Data centers that invest at least $50 million also can get a sales tax break on power supplies and cooling equipment. Wyoming’s Excise Tax Division website offers more information.