Louisiana passed new legislation aimed at providing substantial tax incentives designed to benefit data center operators and developers.
Governor Jeff Landry recently approved House Bill 827, which introduces a tax rebate on the sale of specific data center and communications equipment within the state. Effective July 1, 2024, the legislation applies to all certified data center facilities in Louisiana, as designated by the Department of Economic Development.
The tax break covers a wide range of equipment essential to data center operations, including:
- Servers
- Routers
- Cabling
- Other hardware and software
- Power and cooling systems
- Water conservation technologies
This legislative initiative is expected to have a significant impact on data center operators. By reducing the upfront costs associated with purchasing and installing critical equipment, the tax rebate encourages investment in advanced infrastructure. This, in turn, can enhance the operational efficiency and capacity of data centers located in Louisiana.
To qualify for these incentives, data center projects must meet stringent criteria, such as creating a minimum of fifty new direct, permanent jobs in Louisiana and involving at least $200 million in new capital investment in the state between July 2024 and July 2029. The tax benefits are structured to last for a period ranging from 20 to 30 years, providing long-term financial predictability and stability for operators.
Currently, Louisiana is home to only ten existing data centers, with no known projects currently under construction that meet the specifications outlined in the bill. This legislative initiative aims to attract new data center developments to Louisiana, potentially stimulating economic growth and fostering job opportunities within the state’s technology sector.
After analyzing this bill, our team of experts found that the benefit will apply to most large colocation and enterprise operations. In colocation situations, the facility operator and tenant will share the benefit of the new incentive and can partner in attaining the minimum job and investment numbers required to qualify. The Louisiana bill, via rebates for state and local sales and use tax, creates a competitive environment for data centers with states that offer similar benefits; however, by including power, cooling, and water conservation along with more conventional data center equipment, the state has upped the game for data center incentives.
For professional guidance on how your data center project can benefit from these tax benefits, contact our team for additional information. With our vast corporate tax consulting experience and strong track record of securing large data center tax incentives, we can successfully help you navigate the complexities of the application process while maximizing your tax savings.
| This website content should be used for general informational purposes only, and not as a substitute for consultation with professional tax, legal, or other competent advisors. Before making any decision or taking any action based upon information contained on this website, you should consult with a DMA professional. |
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