Incentive Spotlight
Kansas Enacts Sales Tax Exemption for Data Center Construction and Operations

Program Overview

Kansas has enacted Senate Bill 98, introducing a 20-year sales tax exemption for the development, acquisition, construction, and operation of qualified data centers within the state. The program is designed to attract major digital infrastructure investments by incentivizing companies through significant tax savings. This initiative supports economic development by encouraging job creation, capital investment, and environmentally sustainable practices.

Benefits

Businesses participating in the program receive the following benefits:

• Sales Tax Exemption on:
  • Data center development and construction costs (land, site improvements, buildings)
  • Data center equipment (e.g., servers, routers, cooling, and security systems)
  • Labor services for installation and maintenance of equipment
  • Contractor purchases for eligible construction/modifications
• 20-Year Duration of tax exemption regardless of total investment amount
• Cost Savings that enhance project feasibility and scalability

Eligibility

To qualify for the exemption, businesses must meet these criteria:

1. Investment of at least $250 million in qualified data center costs within 5 years of starting operations.
2. Job Creation of a minimum of 20 new jobs within 2 years of beginning operations.
3. Construction Timeline must commence within 10 years of the agreement date with the Kansas Secretary of Commerce.
4. Electricity Agreement to purchase power for 10 years from the public utility serving the project location.
5. Water Conservation practices must be implemented throughout data center operations.

Application Deadline and Timeline

• Construction must begin within 10 years of entering into an agreement with the Secretary of Commerce.
• Ongoing Compliance is required, including periodic reporting, audits, and adherence to public utility and sustainability commitments.
• Prior Approval from the Kansas Fusion Center Oversight Board is required before receiving the exemption.
• Breach Protocol: Firms have 120 days to correct any breach of the agreement before the exemption is suspended or terminated.