Credits and Incentives Trends
In December 2024, Louisiana Economic Development announced that Meta has selected Northeast Louisiana as the site for a $10B AI-Optimization Center. The race is on for data centers and AI facilities for local jurisdictions and states to compete for such new and exciting projects. In Louisiana, the legislature enacted a new data center sales and use tax exemption. In other states, similar benefits have been provided along with ad valorem tax reductions in local jurisdictions. Congrats to Northeast Louisiana and LED for securing the WIN!
Over the past six months, several AI data centers have been announced across the United States. Here are some notable developments:
Stargate Project in Texas: In January 2025, a joint venture named the Stargate Project was announced by OpenAI, SoftBank, Oracle, and MGX. This initiative plans to invest up to $500 billion over the next four years to build AI infrastructure, starting with 10 data centers in Abilene, Texas.
Microsoft’s AI Data Centers: Microsoft has outlined plans to invest $80 billion in fiscal year 2025 for the development of data centers specifically designed for AI workloads across the United States. While exact locations have not been disclosed, this significant investment underscores Microsoft’s commitment to expanding its AI infrastructure nationwide.
CoreWeave’s Data Center in New Jersey: In October 2024, CoreWeave announced plans to build a $1.2 billion data center at the Northeast Science and Technology Center (NEST) in Kenilworth, New Jersey. The company secured a 280,000 square foot space for this purpose.
Amazon’s Data Center Expansion: Amazon is investing over $100 billion this year to expand its data centers, aiming to enhance its cloud and AI infrastructure. While specific U.S. locations have not been detailed, this investment reflects Amazon’s commitment to supporting the growing demand for AI services.
Developers in Utah have secured a $2 billion construction loan to build a 100-acre data center in West Jordan, Utah. This facility will provide 175 megawatts of power and is part of a growing trend of larger data centers to meet AI demand.
Several U.S. states offer tax incentives to attract data center investments, which can significantly benefit AI data centers due to their substantial infrastructure and energy requirements. Here’s a table summarizing some of these states and the specific tax incentives they provide:
State Tax Data Center Incentives
Alabama
- Offers up to 30 years of tax breaks for data centers investing at least $400 million and creating a minimum of 20 jobs with an average annual compensation of $40,000.
Arizona
- Provides sales tax exemptions for qualifying data centers investing at least $50 million.
Georgia
- Offers sales tax exemptions on high-technology data center equipment for data centers meeting minimum investment thresholds between $25 million and $250 million, depending on the county, and creating at least 25 new quality jobs.
Illinois
- Offers data center investment program that exempts qualifying data centers from the Retailers’ Occupation Tax Act, the Use Tax, Act, the Service Use Tax Act, the Service Occupation Tax Act, all locally-imposed retailers’ occupation taxes administered and collected by the Department of Revenue, and the Chicago non-titled Use Tax.
Indiana
- Data centers investing at least $10 million can receive local personal property tax exemptions on their equipment.
Iowa
- Offers sales tax breaks to data centers investing as little as $1 million, with larger incentives for projects exceeding $200 million. Additionally, there is no property tax on equipment.
Minnesota
- Provides a 20-year sales tax exemption on equipment and energy, and a permanent property tax exemption on equipment for data centers of at least 25,000 square feet and costing at least $30 million.
Mississippi
- Offers a sales tax exemption on computer equipment for data centers investing at least $50 million and creating at least 50 jobs paying 150% of the average state wage.
Missouri
- Provides sales tax exemptions to new data centers investing at least $25 million and employing at least 10 people in well-paying jobs. Existing data centers can qualify by investing at least $5 million and adding five well-paying jobs.
Nebraska
- Offers several tiers of sales and property tax breaks to data centers, starting with those that invest at least $3 million and employ at least 30 people, or invest at least $37 million while maintaining employment levels.
Nevada
- Provides partial sales and property tax exemptions for qualifying data centers that invest more than $25 million and create 10 jobs at average wages.
North Carolina
- Offers a sales tax exemption for equipment and electricity used by data centers that invest at least $150 million in poorer counties or $225 million in other counties.
Ohio
- Provides sales tax abatements for data centers that invest at least $100 million and create an annual payroll of $1.5 million or more. Additionally, there is no tax on tangible personal property for general business filers.
Oklahoma
- Offers a sales tax exemption for equipment bought by businesses engaged in computer services or data processing, provided that at least 80% of their annual revenue comes from out-of-state sales. Also offers a 5-year ad valorem exemption for computer services and data processing facilities that derive at least 50% of their annual revenue from out-of-state sales, invest $500,000 or more in construction, and pay new direct jobs as defined for purposes of Oklahoma Quality Jobs Program.
South Carolina
- Provides a sales tax exemption on computer equipment and electricity used in data centers that invest at least $50 million and employ at least 25 people in well-paying jobs.
Texas
- Offers a 15-year sales tax exemption on equipment and electricity for data centers that are at least 100,000 square feet, invest at least $200 million, and employ at least 20 people at above-average wages.
Virginia
- Offers a sales tax exemption for data center equipment to those data centers that qualify by meeting both capital investment and employment thresholds. Also, many localities have reduced local business process property tax rates on computers and related equipment for data centers.
Wyoming
- Provides data centers that invest at least $5 million a sales tax exemption on computer equipment. Data centers that invest at least $50 million can also get a sales tax break on power supplies and cooling equipment.