Indiana: Indiana Signs New Tax Exemption Law to Spur Data Center Construction

May 30, 2019 | Posted by Eric Bell

On June 27nd 2019 Indiana Governor Eric Holcomb signed into law the Indiana Data Center Sales Tax Exemption as an incentive to lure more data center construction to the state. The new legislation pushed by Digital Crossroads and other data centers in Indiana. 

The Data Center Gross Retail and Use Tax Exemption provides a sales and use tax exemption on purchases of qualifying data center equipment and energy to operators of a qualified data center for a period not to exceed 25 years for data center investments of less than $750 million. 

To qualify for the exemptions, data centers must reach a certain threshold for investment within 5 years of receiving an exemption certificate from the Department of Revenue. The minimum investment required is determined by the population of the county in which the qualified data center is located: 

  • $25 million in counties with less than 50,000 people 
  • $100 million in counties between 50,000 and 100,000 people 
  •  $150 million in counties with 100,000 or more people 

Equipment that is eligible for the exemption includes the servers and related computer equipment or software purchased or leased for the processing, storage, retrieval or communication of data, as well as other equipment essential to the operation of the data center. This includes electricity used in qualified data center operations. All equipment purchases must be approved by the IEDC before they are made. 

The data center tax exempt status applies for up to 25 or 50 years, depending on the amount of investment the data center commits.