Washington state will roll back tax incentives for data center equipment this year, the latest move by state governments seeking to rein in the industry.
A bill signed by Gov. Bob Ferguson (D) last week strips an existing sales tax exemption for data center operators when they replace or refurbish old server equipment. New data centers, however, still would be eligible for a sales tax exemption for their equipment under the tax law change, which takes effect July 1.
The move represents a significant shakeup for the state, which hosts more than 100 data centers. Many tech companies have been attracted to Washington for both its friendly tax environment and its plentiful and inexpensive hydropower resources.
A report from a state working group that examined data center policy in the state found that the growth in tech infrastructure is driving up power demand, which in turn could “challenge the state’s efforts to decarbonize its energy system, maintain affordable and reliable service, and protect its environmental and cultural resources.”
