Incentives Watch: States Offering a Variety of Incentives to Attract Data Centers

Nebraska recently enacted a bill that offers tax incentives, including sales and use tax refunds and personal property tax exemptions, to companies that build large data centers in the state. 

Companies looking for a place to build a data center must consider many different factors, including the availability of power, geography, and, of course, tax incentives. 

Nebraska is not the only state trying to attract new data centers or encourage existing ones to stay. New York offers various incentives to existing data centers that perform certain improvements to make their buildings more energy efficient, according to Bloomberg BNA’s Green Incentives Navigator. More incentives will be offered as sustainability becomes an important factor for companies worried about their carbon footprint. 

Iowa, Mississippi, Nebraska, Virginia and Washington also have incentives aimed at attracting data centers, according to the Bloomberg BNA State Tax Portfolios.

Eleven states offer business personal property tax incentives to data centers, according to an article in Site Selection. The article points out that “property and sales taxation, or potential abatement thereof, is the factor with the most potential for delivering long-term cost savings to data center operations.” 

And, sometimes, companies with data centers go directly to the legislature and ask the state to enact certain exemptions. In Oregon, where Facebook decided to locate its data center, the company has asked lawmakers to enact legislation that would exempt property in enterprise zones from being assessed by the state, according to an article in IT World. “As large companies seek out ‘off-the-beaten-path’ locales to build data centers, a number of issues – like the tax bill troubles Facebook and Oregon are ironing out – will continue.”

In other developments . . .

The New York Department of Taxation and Finance issued guidance regarding who is considered an operator of an internet data center for purposes of a sales tax exemption, and which property and services are exempt, according to a recent article by Bloomberg BNA State Tax Law Editor Christine Boeckel.

By: Kathleen Caggiano

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