With the enactment of Louisiana Revised Statute 47:305.73, the state has taken significant steps to incentivize the development of data centers. The statute provides a state and local sales and use tax exemption for eligible data center equipment, software, and certain construction and development costs.
However, while the exemption provides substantial opportunity, there are still questions regarding the practical application of the statute.
Under R.S. 47:305.73, an “approved data center facility” is defined as a facility located in Louisiana that is certified by Louisiana Economic Development (LED). To qualify, the operator must attest that the project will create a minimum of 50 new direct, permanent jobs and expend at least $200 million in new capital investment in Louisiana between July 1, 2024, and July 1, 2029.
The exemption covers “data center equipment,” which is broadly defined to include equipment or software purchased or leased for the processing, storage, retrieval, or communication of data. This includes:
- Servers, routers, and connections.
- Power generation and management equipment (generators, substations, batteries).
- Cooling systems (chillers, cooling towers, piping).
- Water conservation systems.
- Monitoring and security systems.
- Equipment, materials, and services necessary for the development, acquisition, construction, expansion, and renovation of a qualified data center.
While the statute lists various exempt items, the practical application of the exemption remains complex. We will continue to monitor for any interpretive guidance and are available to help evaluate eligibility, structure compliance processes, and maximize the benefits of the exemption while managing risk.
Multi-State Comparison
Building on Louisiana’s enactment of a data center sales and use tax exemption, it is important to recognize that Louisiana is not alone in offering these incentives. Many states have adopted comparable exemptions to compete for large-scale data center development. For a summary of comparable exemptions across the United States, please see Louisiana Credits & Incentives Update – Advantous.
Need Assistance? Navigating the complexities of data center sales and use tax exemptions across the United States can be challenging. We recommend reaching out to the Sales and Use Tax team at Advantous Consulting for expert assistance with multi-state data center exemptions and the application processes.