This post was originally published on Data Center Knowledge
Tax incentives for the data center industry remain plentiful, but the goals that data center tax breaks aim to serve are shifting. So are the government agencies that devise tax incentives for the industry, with the federal government now assuming a larger role in incentivizing certain data center activities through tax policy.
At a high level, that paragraph summarizes the state of data center tax incentives and financial legislation in 2023. Read for a deeper look at which tax advantages data center owners can capitalize on, and how lawmakers are rethinking such tax breaks.
Data center tax incentives: An overview
Governments have long offered tax incentives to companies that build or operate data centers. Historically, most of those incentives were marked by two notable characteristics:
They were designed primarily to encourage business development and job creation. They were offered in most cases by state governments. The U.S. federal government was not a major player in offering tax advantages to the data center industry, and few local governments have tax incentives aimed at data centers.
A typical example is Maryland’s sales and use tax exemptions for data centers. Data center
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