On April 24, 2025, Kansas Senate Bill 98 (“SB-98”) was approved by Governor Kelly. SB-98, which replaced Kansas Senate Bill 51, outlines a complete sales tax exemption from Kansas state and local sales and use tax (SUT) on the construction or remodeling of qualified data centers. The sales tax exemption applies to the sale and installation of certain data center equipment and eligible data center costs purchased by the qualified firm for the qualified data center. The exemption also extends to labor services to install, apply, repair, service, alter, or maintain data center equipment. SB-98 will allow qualified data centers to take advantage of the exemption on or after July 1, 2025.
What Is the Benefit?
Qualifying facilities are eligible for a 100% SUT exemption on qualified data center costs and equipment for up to 20 years.
Who Is Eligible?
SB-98 defines a “qualified data center” as follows:
- One or more buildings that are constructed, reconstructed, enlarged, or remodeled to house a group of networked computer servers.
- Is used to centralize the storage, management, and dissemination of data.
- All buildings are connected by fiber and associated equipment required for operating a fiber transmission network between data center buildings and internet points to provide redundancy and resiliency for the data center services provided in each building.
SB-98 defines a “qualified firm” as follows:
- A business or an affiliate thereof that is registered with the secretary of state and is engaged in the development, operation or leasing of a qualified data center.
What Are the Required Commitments?
- Submit an application as required by the Secretary of Commerce (“Secretary”) and enter into an agreement with the Secretary upon approval.
- The data center facility commits to begin construction within 10 years of the Agreement’s effective date.
- Investment of at least $250,000,000 within five years of commencing operations.
- Create and maintain at least 20 new jobs within two calendar years of beginning operations.
- Commit to purchase electricity for 10 years from the certified public utility in the territory where the qualified data center is located.
- Commit to undertake practices that will conserve, reuse, and replace water, including, but not limited to, using water efficient fixtures and practices and recycling water before discharging.
What Are the Post Approval Commitments?
- Cooperate with audits undertaken by the Kansas Secretary of Revenue.
- Provide the Secretary of Commerce information required for:
- Publication in the economic development incentive program information database.
- The Secretary’s annual report.
- Periodic review of standing and eligibility.
- The Secretary of Commerce would also be required to conduct a review of the qualified firm every five years and certify to the Secretary of Revenue that the qualified firm can continue to receive the sales tax exemption.
Why Ryan?
With more than $100 billion of new data center project capital investment over the next five years across nearly all the contiguous United States, the Ryan Data Center Incentives team has a proven track record of working with data center businesses to secure significant savings as they develop, refurbish, and grow their offerings. To learn more about the latest trends in the industry, register to watch a free, pre-recorded webinar on Data Center Tax Incentives: Navigating National Landscapes hosted by Michael Falleroni and Matt Lowell (contact information located below).
TECHNICAL INFORMATION CONTACTS:
Michael Falleroni
Principal
Ryan
412.889.6434
michael.falleroni@ryan.com
Matt Lowell
Principal
Ryan
321.251.2924
matt.lowell@ryan.com
Austin Arnold
Senior Manager
Ryan
380.710.9686
austin.arnold@ryan.com
Brad Vincent
Consultant
Ryan
321.251.2929
bradley.vincent@ryan.com
Ryan Data Center Team
datacenters@ryan.com
The material presented in this communication is intended to provide general information only and should solely be seen as broad guidance and not directed to the particular facts or circumstances of any individual who may read this publication. No liability is accepted for acts or omissions taken in reliance upon the content of this piece. Before taking (or not taking) any action, readers should seek professional advice specific to their situation from Ryan, LLC or other tax professionals. For additional information about this topic, please contact us at info@ryan.com.
- Topics
- Credits and Incentives
- Kansas