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Committee approves amendment trimming data center tax abatements to 20 years and preserving construction tax collection
Summary
House Bill 399, revising data center tax incentives, was amended to shorten maximum abatements from 30 to 20 years, require certain sales/use taxes on building materials be collected, and preserve abatement for operational IT equipment; the committee gave the bill a favorable report as amended.
Representative Holsey presented House Bill 399 to update data center incentives. She said the bill reduces the maximum tax exemption period from 30 years to 20 years, requires facilities to begin paying state sales and use taxes and state non-educational ad valorem taxes once placed in service, and directs those revenues to the state general fund while preserving local government receipts.
Representative Holsey described an amendment that limits the long-term abatement: it preserves abatement for operational IT equipment that must be refreshed frequently but requires payment of state sales and use taxes on building materials, fixtures and infrastructure tied to construction, with abatements for construction-related taxes ending when property is placed in service. She said the change aligns Alabama with neighboring states while maintaining incentives for required equipment.
Committee members asked clarifying questions about which taxes are affected (sales/use versus utility taxes) and the operational carve-outs for servers and cooling systems. Representative Moore moved the amendment and Representative Travis seconded; the amendment passed by voice vote. Representative Given moved and Representative Kirkland seconded giving House Bill 399 as amended a favorable report, and the committee approved the bill as amended by voice vote.
