On January 17, 2025, Governor Gretchen Whitmer signed House Bill 4906, now Public Act 207 of 2024, into law, amending the Michigan General Sales Tax Act. The legislation extends the current sales tax exemption for data center equipment through December 31, 2050, for qualified data centers. Additionally, it establishes new exemptions for enterprise data centers, including additional benefits for facilities located on brownfield redevelopment sites or former industrial power plant properties, with the exemption period for these sites extended through December 31, 2065.
The new language in the legislation introduces targeted incentives for enterprise data centers on brownfield sites and former power plants. Under the amended provisions, qualified entities operating or constructing such facilities can claim exemptions for data center equipment used in operations, assembly, or incorporation into the facility, including equipment that becomes a structural component of the facility. To qualify for the exemption, facilities must meet specific criteria, including a $250 million capital investment and the creation of at least 30 full-time jobs paying 150% or more of the local prosperity region’s median wage.
Additionally, these facilities must satisfy stringent environmental standards, including certification under at least one recognized green building standard and sourcing 90% of electricity usage from renewable energy. Certificates for exemption, issued by the Michigan Strategic Fund (MSF), are required to claim these benefits. No new certificates will be issued after December 31, 2029. Existing certificates, however, will remain valid if the facilities continue to comply with statutory requirements.
These changes present a meaningful opportunity for taxpayers engaged in or considering data center investment in Michigan. The expanded exemptions reduce costs for facilities, particularly those located on historically underutilized or less attractive investment sites. Because the MSF will no longer issue certificates after December 31, 2029, taxpayers should evaluate their eligibility promptly. Companies planning new facilities or expansions should carefully review the requirements to ensure compliance and maximize available benefits.
If your company is thinking about building an enterprise data center, this might be a great incentive to build it in Michigan. Our Ryan team can help you maximize available tax savings for building or adding to an existing data center. Please contact Ryan Principal Dustin Davis listed below for assistance.
TECHNICAL INFORMATION CONTACTS:
Dustin Davis
Principal
Ryan
469.399.4286
dustin.davis@ryan.com
Joey Browdy
Consultant
Ryan
331.200.5290
joey.browdy@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.
- Sujet
- Dustin S. Davis