Incentive Spotlight
Arkansas Expands Tax Exemptions to Boost Data Center Growth

Program Overview

With the passage of House Bill 1444, Arkansas is enhancing its competitive edge in the digital infrastructure space by expanding sales and use tax exemptions for data centers. This legislation, backed by Representative Pilkington and Senator J. Dismang, aims to attract large-scale, high-tech investment and support long-term economic growth across the state.

The bill updates key definitions, broadens eligibility for tax breaks, and introduces a tiered system for facilities based on investment and workforce commitments. Oversight will be handled by the Arkansas Department of Finance and Administration and the Arkansas Economic Development Commission.

Benefits

Broadened Sales & Use Tax Exemptions

• Applies to computing hardware (servers, routers, switches), software, and licensing
• Includes infrastructure such as cooling systems, backup power, environmental controls, and cabling—even when located outside the facility
• Covers installation, maintenance, and upgraded labor services
• Exempts electricity consumed by qualifying facilities

Expanded Definition of “Eligible Data Center Costs”

• Now includes expenses for land, buildings, renovations, permitting, leasing, and engineering services

Tiered Incentive Structure

• Qualified Data Centers
  • $100 million investment within 5 years
  • $1 million in payroll compensation over 2 years
• Qualified Large Data Centers
  • $2 billion investment within 10 years
  • $3 million in payroll compensation
  • Must connect multiple non-adjacent sites via fiber

Regulatory Safeguards

• Facilities that fail to meet investment or compensation requirements may lose exemptions
• Sub-facilities may still qualify independently if they meet the standards on their own

Eligibility

To qualify for exemptions under HB1444, companies must:

• Apply to the Arkansas Department of Finance and Administration
• Undergo a cost-benefit analysis by the Arkansas Economic Development Commission
• Receive a financial incentive certificate

Ongoing Requirements

• Submit annual certifications to verify continued compliance with investment and compensation thresholds
• Maintain eligibility by meeting all specified criteria
• Facilities focused on cryptocurrency mining or blockchain operations are not eligible

Application Deadline and Timeline

Effective July 1, 2025