Committee hears competing claims over HF1277’s shift of data‑center tax rebate to point‑of‑sale exemption

The Minnesota House Taxes Committee heard testimony on House File 1277, a bill that would create a new “large‑scale data center” category and convert portions of the state’s current sales‑tax rebate for data‑center equipment, software and electricity into an upfront point‑of‑sale exemption for qualifying projects.

Supporters told the committee the change would make Minnesota more competitive for large capital investments and free up private capital, while opponents warned the change would obscure program costs, increase pressure on the state’s energy and water systems, and shift the fiscal burden onto Minnesota taxpayers.

House Research staff described the bill as expanding the existing sales‑and‑use tax exemption for qualifying data‑center equipment, software and electricity to cover a new class of “large scale data centers.” The bill would create specifications and a certification process administered by the Department of Employment and Economic Development for projects to qualify. It also specifies that a current exemption expiration date of July 1, 2042 applies to existing qualifying and qualified refurbished data centers but not to the new large‑scale category proposed by HF1277.

Proponents’ case

Barbara Comstock, representing NetChoice, told the committee states that adopted long‑term certainty for data centers attracted major investment and local tax revenues, citing Virginia as an example. Comstock said, “this is nearly a $100,000,000,000 market, bigger than manufacturing, telecom, or any other industry,” and argued that Minnesota should offer similar long‑term…