Data Center Tax Incentives You Need to Know About

Every state offers various tax incentives for data centers. At the national level, there are policies and programs that are designed specifically to support the growth and wide-spread adoption of data centers. Thanks to these incentives, some states naturally turn out to be more conducive to building or leasing out a data center as compared to others.

As of today, there are close to 17 states that offer tax benefits for the data center industry.

For data centers, the two most important taxes that are applicable are the sales tax and the property tax. Did you know that there are 5 states that do not charge any sales tax at all? These states are Montana, Delaware, New Hampshire, Oregon and Alaska. Sales tax will typically be applicable on the building materials and the equipment. For example, if you choose to buy data center equipment of approximately 10 million dollars in the state of Ohio, you would be paying around $700,000 in sales tax.

Real estate tax would also apply annually depending on the local tax rate and the data center property value. Personal property tax is also payable yearly for all equipment, furniture, and other items that are not tightly bound to the real estate. There are 11 states that exempt their customers from paying this tax.

The key here is the exemption that most states have started offering in order to boost the data center industry growth. Some of the states that have introduced new tax breaks in the year 2012-2013 are Virginia, Georgia, Arizona, South Carolina, Indiana, Alabama, Texas, Ohio and Nebraska.  The state of Indiana delighted businesses by offering a new data center tax incentive in the year 2012. According to this new incentive, sales tax on IT equipment such as computers, electrical and mechanical equipment and power infrastructure is 100% exempt.

A tax incentive is typically for a longer term, and, therefore, many corporate organizations consider this factor when selecting a long-term data center facility. For the best rates in collocation data centers, visit www.lifelinedatacenters.com today.

Alex Carroll

Managing Member at Lifeline Data Centers

Alex, co-owner, is responsible for all real estate, construction and mission critical facilities: hardened buildings, power systems, cooling systems, fire suppression, and environmentals. Alex also manages relationships with the telecommunications providers and has an extensive background in IT infrastructure support, database administration and software design and development. Alex architected Lifeline’s proprietary GRCA system and is hands-on every day in the data center.