IdahoSales tax exemption rules would limit covered data center purchases
Qualifying data center businesses would face equipment-only sales tax coverage for projects starting after April 1, 2026, while some earlier large investments could qualify for property tax relief.
What it does
For data centers that begin construction on or after April 1, 2026, the sales and use tax exemption would cover eligible server equipment but not new buildings and related facilities.
Property worth more than $400 million in one county could avoid property taxes and special assessments when tied to a $1 billion investment in facilities started before April 1, 2026.
Beginning in 2027, the tax commission would report estimated lost sales tax revenue; beginning in 2032, it would also report data center jobs, investment, electricity, and water effects.
Argument forReporting on revenue, jobs, electricity, and water use could give lawmakers and communities clearer information about data center projects.
Argument againstLimiting the sales tax exemption for newer projects to equipment could raise the tax cost of building data centers.
More detail
Qualifying businesses and their contractors would receive a sales and use tax exemption for eligible server equipment. The exemption would cover qualifying businesses and contractors installing eligible server equipment or building data centers for those businesses. The business would need to plan at least $250 million in data center investments and at least 30 new jobs. For construction starting on or after April 1, 2026, the business would need an electricity agreement that recovers the utility's full service costs. Before construction starts, the business would need to notify the local water provider and the Department of Water Resources about expected water use. For data centers whose construction starts on or after April 1, 2026, the exemption would apply only to eligible server equipment. The exemption would last 20 years after final approval certification.
A taxpayer could exclude part of the value of property from property taxes and special assessments. The exemption would apply to property worth more than $400 million in one Idaho county when tied to a qualifying new capital investment of at least $1 billion. The investment would need to relate to new plants and building facilities. The facilities would need to have started construction before April 1, 2026. Other state property tax exemptions generally could not apply to the same property during a year covered by this exemption. The exemption would apply for tax years beginning on or after January 1, 2008, subject to the requirement that construction began before April 1, 2026. Qualifying amounts could be adjusted each year beginning in tax year 2026.
The State Tax Commission would report estimated forgone sales tax revenue and data center effects to legislative committees. The reports would cover qualifying businesses and exempt data centers, including their jobs, investment, electricity use, and water use. The commission would use anonymized and combined data for the annual revenue report. The later reports would also discuss how data center electricity and water use affected availability and prices in nearby communities. Annual revenue reports would begin by February 1, 2027, covering the prior calendar year. Broader jobs, investment, electricity, and water reports would begin in 2032 and repeat every five years.
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Where it stands
- Introduced
- Passed 1st Chamber
- Passed 2nd Chamber
- To Governor
- Became Law
Looking ahead
No hearings or votes scheduled.
History
- 2026
- Apr 2Referred to Revenue & Taxation for concurrence recommendationLatest
- Apr 2Returned from the Senate Amended
- Apr 1Read third time as amended in the Senate – PASSED - 34-0-1AYES – Adams, Anthon, Bernt, Bjerke(Bjerke), Blaylock, Burtenshaw, Carlson, Cook, Den Hartog, Galloway, Grow, Guthrie, Harris, Hart, Keyser, Kohl, Lakey, Lenney, Lent, Nichols, Okuniewicz, Rabe, Ricks, Ruchti, Semmelroth, Shippy, Taylor, Toews, VanOrden, Ward-Engelking, Wintrow, Woodward, Zito, ZuiderveldNAYS – NoneAbsent and excused – ForemanFloor Sponsor - Den HartogTitle apvd - to HousePassed 2nd Chamber
- Vote recorded Read third time as amended in the Senate –. Result: pass.Upper
- Mar 31Read second time as amended in the Senate, filed for Third ReadingMinor
- Mar 30Read first time as amended in the Senate; Filed for Second Reading
- Mar 30Amendments reported printed
- Mar 30Reported out as amended; filed for first reading
- Mar 30Amendments ordered printed
- Mar 30Placed in the Committee of the Whole
- Mar 25Reported out of committee; to 14th Order for amendment
- Mar 24Introduced, read first time; referred to: Local Government & TaxationMinor
- Mar 24Received from the House passed; filed for first reading
- Mar 23Read Third Time in Full – PASSED - 68-0-2AYES – Alfieri, Barbieri, Beiswenger, Bingham, Boyle, Bruce, Burgoyne, Cannon, Cayler, Cheatum, Church, Cornilles, Crane(12), Crane(13), Dygert, Egbert, Ehardt, Ehlers, Erickson, Fuhriman, Furniss, Gannon, Garner, Green, Hall(Stone), Handy, Harris, Hawkins, Haws, Healey, Hill, Holtzclaw, Hostetler, Leavitt, Manwaring, Marmon, Mathias, McCann, Mendive, Mickelsen, Miller, Mitchell, Monks, Nelsen, Palmer, Petzke, Pickett, Pohanka, Price, Rasor, Raybould, Raymond, Redman, Rubel, Sauter, Scott, Shepherd, Shirts, Skaug, Tanner(13), Tanner(14), Thompson, Vander Woude, Veile, Weber, Wheeler, Wisniewski, Mr. SpeakerNAYS – NoneAbsent – Berch, GalavizFloor Sponsor - BruceTitle apvd - to SenatePassed 1st Chamber
- Vote recorded Read Third Time in Full –. Result: pass.Lower
- Mar 20U.C. to hold place on third reading calendar until Monday, March 23, 2026
- Mar 19Read second time; Filed for Third ReadingMinor
- Mar 18Reported out of Committee with Do Pass Recommendation, Filed for Second ReadingMinor
- Mar 16Reported Printed and Referred to Revenue & Taxation
- Mar 13Introduced, read first time, referred to JRA for PrintingIntroduced
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