The Colossus 2 data center in Tennessee – retrieved from xAI
As the AI infrastructure build out continues to meet headwinds from concerned citizens, 3 states recently signed laws ending what had been the largely standard practice of exempting data center operators from sales taxes.
Tucked into a state budget passed on June 15th, Arizona Governor Katie Hobbs touted that data centers located in the state would now have to pay sales tax on the gobs of energy they use.
Bloomberg Tax wrote that the exemption had been live since 2013, and it’s likely to raise $38 million in revenues for Arizona annually.
Taking effect on July 1st, Washington Governor Bob Ferguson signed a law in April that removed tax exemptions for replacement equipment in data centers.
The hardware inside those giant humming hubs of technology has a de-facto operating lifespan of just 3 years on average given the pace of advancement in the development of semiconductors, and thus require routine replacement.
S.B. 6231 would remove the sales tax exemption for data center operators looking to replace that compute.
In late June, the Pennsylvania legislature passed a repeal of tax breaks and incentives for data centers that has stood for 5 years.
MORE DATA CENTER STORIES: Tennessee Joins States Requiring Data Center Owners to Pay Full Electricity, Infrastructure Costs
The bill’s primary sponsor cited a half-billion-dollar gain in potential revenues over 5 years, and argues that with the abundance of data centers proposed and already existing across PA communities, there’s little reason to keep an incentive that was designed to attract America’s #1 productive activity to the state a decade ago.
“We’re giving these sales tax exemptions to companies like Amazon, Microsoft, Alphabet—companies that have net incomes in excess of $100 billion a year,” said the sponsor, Rep. Greg Vitali (D). “This is not needed.”
Like Washington, the Pennsylvania legislation would apply to data center equipment purchases.
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