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House shortens data-center tax abatements, narrows sales-tax exemptions
Summary
The House passed HB399 to shorten maximum tax-abatement terms for data processing centers from 30 to 20 years, preserve sales-tax exemptions for operational IT equipment, and begin collecting certain sales and use taxes after buildout; substitute and floor amendments were adopted.
Representative Hulsey presented HB399, a bill to revise state incentives for data centers and better target tax abatements. Lawmakers adopted a committee substitute and a floor amendment that together shortened the maximum abatement term from 30 to 20 years, maintained an exemption for operational IT equipment that must be refreshed regularly, clarified sales-tax treatment for construction materials and building fixtures, and specified that some sales taxes would be collected at key points after facility buildout.
Supporters said the changes retain competitiveness while adding more near-term revenue to the general fund. Representative Hulsey said the substitute sets the effective abatement rules for agreements granted on or after Jan. 1, 2027, giving pending negotiations time to conclude under previously negotiated terms while making new limits clear for future projects.
Legislators adopted the sub and the floor amendment and the House recorded final passage. The sponsor said the changes were developed with industry engagement to preserve investment while addressing public concern about long-term tax exemptions.
What’s next: The bill passed the House as substituted and will move through the remaining legislative steps.
