Minneslate Logo

HF1277 (Legislative Session 94 (2025-2026))

Data centers sales and use tax exemption modified.

Related bill: SF769

AI Generated Summary

This bill proposes modifications to the existing tax exemptions for certain data centers in the state of Minnesota. Specifically, it amends Minnesota Statutes 2024, sections 297A.68, subdivision 42, and 297A.75, subdivision 1, to refine the eligibility criteria and conditions under which data centers can qualify for sales and use tax exemptions.

Key Provisions:

  1. Expanded Exemptions for Qualified Data Centers:

    • Enterprise information technology equipment and computer software purchases for use in qualified data centers, qualified refurbished data centers, and qualified large-scale data centers are exempt from sales tax.
    • Electricity consumption at these data centers is also exempt.

  2. Definitions and Investment Thresholds:

    • A qualified data center must:
      • Cover at least 25,000 square feet.
      • Incur construction or refurbishment costs of at least $30 million within a 48-month period.
    • A qualified refurbished data center must:
      • Cover at least 25,000 square feet.
      • Incur at least $50 million in construction or refurbishment costs within a 24-month period.
    • A qualified large-scale data center must:
      • Consist of multiple connected buildings totaling at least 25,000 square feet.
      • Have a total investment of at least $250 million within a 60-month period.

  3. Certification Requirements:

    • The Minnesota Department of Employment and Economic Development (DEED) must certify that a data center meets the qualifications before exemptions apply.
    • DEED must notify the Department of Revenue about which facilities qualify.

  4. Prevailing Wage Requirements:

    • Laborers and mechanics working on construction or refurbishment of data centers must be paid the prevailing wage as defined by state law.

  5. Sustainability Standards for Large-Scale Data Centers:

    • Within three years of operation, a large-scale data center must obtain certification under a recognized sustainability standard, such as LEED, Energy Star, or BREEAM.

  6. Repayment Clause:

    • If a qualified large-scale data center fails to meet the sustainability certification requirement, it must repay the tax exemption benefits received.

Overall Impact:

This bill aims to promote the development of data centers in Minnesota by providing tax incentives, ensuring fair labor wages, and incorporating sustainability measures for large-scale facilities.

Bill text versions

Actions

DateChamberWhereTypeNameCommittee Name
February 19, 2025HouseFloorActionIntroduction and first reading, referred toTaxes
February 19, 2025HouseFloorActionIntroduction and first reading, referred toTaxes
February 26, 2025HouseFloorActionAuthor added
March 05, 2025HouseFloorActionAuthor added

Citations

 
[
  {
    "analysis": {
      "added": [
        "Clarification of requirements for qualified data centers, refurbished data centers, and largescale data centers."
      ],
      "removed": [],
      "summary": "This bill modifies the exemption for certain data centers under section 297A.68, subdivision 42.",
      "modified": [
        "Specification of construction, equipment, and refurbishment cost thresholds; alteration of the refund process; introduction of pre-certification and sustainable design standards."
      ]
    },
    "citation": "297A.68",
    "subdivision": "subdivision 42"
  },
  {
    "analysis": {
      "added": [],
      "removed": [],
      "summary": "The bill refers to prevailing wage rate definitions for laborers and mechanics in the context of data center construction under section 177.42, subdivision 6.",
      "modified": [
        "Incorporation of prevailing wage rate enforcement in connection with data center construction."
      ]
    },
    "citation": "177.42",
    "subdivision": "subdivision 6"
  },
  {
    "analysis": {
      "added": [],
      "removed": [],
      "summary": "The bill references enforcement provisions relevant to labor standards during data center construction under section 177.27.",
      "modified": []
    },
    "citation": "177.27",
    "subdivision": ""
  },
  {
    "analysis": {
      "added": [],
      "removed": [],
      "summary": "The bill references enforcement provisions relevant to labor standards during the refurbishment of data centers under section 177.30.",
      "modified": []
    },
    "citation": "177.30",
    "subdivision": ""
  },
  {
    "analysis": {
      "added": [],
      "removed": [],
      "summary": "The bill references enforcement provisions relevant to labor standards in data centers under section 177.32.",
      "modified": []
    },
    "citation": "177.32",
    "subdivision": ""
  },
  {
    "analysis": {
      "added": [],
      "removed": [],
      "summary": "The bill references enforcement provisions concerning labor standards in the context of data center refurbishment under section 177.41.",
      "modified": []
    },
    "citation": "177.41",
    "subdivision": ""
  },
  {
    "analysis": {
      "added": [],
      "removed": [],
      "summary": "This section is cited in relation to enforcing labor standards associated with data center refurbishment projects under section 177.45.",
      "modified": []
    },
    "citation": "177.45",
    "subdivision": ""
  },
  {
    "analysis": {
      "added": [],
      "removed": [],
      "summary": "This bill addresses the repayment conditions if data centers fail to meet requirements, potentially involving actions under section 289A.38, subdivision 1.",
      "modified": [
        "Repayment stipulations if specific data center criteria are not met."
      ]
    },
    "citation": "289A.38",
    "subdivision": "subdivision 1"
  }
]

Sponsors