On January 21, 2025, the Kansas Senate Committee on Commerce introduced Senate Bill 51 (SB-51), which contemplates 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 would apply 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 and labor services to install, apply, repair, service, alter, or maintain data center equipment. SB-51 would allow qualified data centers to take advantage of the exemption on or after July 1, 2025. SB-51 is subject to alteration during the legislative process. Thus, information contained in this alert may become outdated in the event of changes to SB-51.
What Is the Benefit?
Qualifying facilities are eligible for a 100% SUT exemption on qualified data center costs and equipment for up to 60 years based on investment.
Who Is Eligible?
SB-51 defines a “data center facility” 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-51 defines a “qualified firm” as follows:
- A business or an affiliate thereof that is registered with the secretary of state and is engaged in data processing, storage, and dissemination.
What Are the Required Commitments?
For a data center facility to be certified, it must meet the following criteria and 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 requirements by exemption term:
- $250 million within five years of commencing operations allows for a 15-year exemption.
- $500 million within five years of commencing operations allows for a 30-year exemption.
- $1 billion within five years of commencing operations allows for a 60-year exemption.
- Create and maintain at least 20 new jobs within two calendar years of beginning operations.
Whom Do I Call for Help When Applying?
For more information, please reach out to the Ryan Data Center team and its experts.
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
Bradley Vincent
Consultant
Ryan
321.251.2929
bradley.vincent@ryan.com
Ryan Data Center Team
datacenters@ryan.com
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Michigan Expands Sales Tax Exemption for Data Center Equipment
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.