Many states offer sales-tax exemptions on equipment purchases, property-tax abatements on the building shell, and personal-property abatements on IT equipment with employment and investment thresholds. Lenders model the incentives into stabilized sizing but discount the present value if there are sunset provisions or performance-covenant clawback risk.
Where the largest programs sit
The largest data center tax incentive programs are in Virginia (sales-tax exemption with employment thresholds), Texas (the state sales-tax exemption on qualifying data-center equipment under Tax Code section 151.359; Chapter 313 has expired, and its successor, JETI, is not a reason to underwrite a standalone data center as if it qualifies), Georgia (sales-tax exemption with investment thresholds), Ohio, and Iowa. Each program has its own performance covenants, sunset provisions, and clawback mechanics.
Sponsors should obtain incentive certifications before closing the construction loan and document the performance-covenant compliance plan carefully. The loan documents typically include a covenant that the sponsor maintain incentive eligibility through the term of the loan.
Sources
- Data Center Energy Use: GAO Reports on Power Demand & Federal Programs · U.S. Government Accountability Office (GAO) · current
- Georgia Integrated Resource Plan and Large Load Tariff Filings · Georgia Public Service Commission · current