Georgia Governor Brian Kemp recently vetoed a bill that aimed to pause sales tax exemptions on data center equipment for two years. This decision maintains the state’s competitive tax landscape, benefiting high-technology data center operators and fostering infrastructure and job development.
Key Takeaways
- Legislation Vetoed: The bill intended to pause sales tax exemptions on data center equipment
- Economic Competitiveness: The veto maintains Georgia’s competitive edge in attracting and retaining high-technology data center investments
- Impact: The veto supports continued development of data centers and prevents disruptions to investments in new infrastructure and job development
Background
On May 8, 2024, Georgia Governor Brian Kemp vetoed HB 1192, a bill that would have paused sales tax exemptions on data center equipment for two years. This controversial bill made its way through the Georgia General Assembly after concerns were raised about the impact data centers have on the power grid.
The bill was set to pause the exemption starting July 1, 2024. Governor Kemp’s veto emphasized the potential negative impact on investments made by high-technology data center operators and other stakeholders, which relied on the recent multi-year extension of the incentive passed by the Legislature in 2022.
The Proposed Legislation’s Impact
The vetoed bill would have halted sales tax exemptions on data center equipment, potentially discouraging investment in Georgia’s data center industry. Governor Kemp noted that such a pause would undermine the investments and hinder important infrastructure and job development. The tax landscape for data centers is clear: states that are competitive in attracting data centers often exempt sales tax on equipment and, where applicable, business personal property taxes. These exemptions are crucial in maintaining cost competitiveness.
Implications of the Veto for Businesses
For data center owners, operating costs significantly influence location decisions. Besides utilities, taxes on land, equipment, purchases, and income are major expenses. By maintaining the sales tax exemption, Georgia remains an attractive location for data centers, which can collaborate with municipal leaders to further reduce tax burdens and create mutually beneficial revenue streams for communities.
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To understand how this development might affect your business and get expert assistance, contact DMA’s Credits & Incentives team for a consultation. We provide comprehensive support to navigate these changes and optimize your tax position.