WashingtonTax rules set exemptions and deadlines for data center equipment
Beginning on the date stated in the act, qualifying data center owners and tenants may claim listed equipment tax exemptions if they receive certificates and meet program rules.
What it does
Qualifying data center owners and tenants may use a sales-tax exemption for listed server and power equipment, but they must meet certificate, job, reporting, and deadline rules.
A separate exemption covers listed equipment at certain large data centers, with limits on applications, available power, qualifying equipment, certificates, and the program’s end date.
Argument forThe exemptions could lower the cost of installing qualifying equipment, which may support investment in eligible data centers that meet the program’s requirements.
Argument againstCertificate holders could owe previously exempted taxes if they miss job, environmental, or reporting requirements, creating repayment risk for data center businesses.
More detail
The Department of Revenue may issue certificates allowing qualifying businesses and tenants to avoid sales tax on listed server equipment, power infrastructure, and related installation work. This covers for-profit owners and tenants of eligible computer data centers that meet the location, size, construction, and equipment rules in the text. An applicant must apply for a certificate and give the certificate to the seller. Businesses and tenants must meet job, reporting, and other program requirements. Some certificates also require green-building certification, and missed requirements can lead to canceled certificates and repayment of taxes. The section takes effect July 1, 2026. It bars new certificates for some eligible centers on or after July 1, 2036, and the exemption expires July 1, 2048; refurbishment-related certificates and exemptions end July 1, 2026.
The Department of Revenue may issue certificates allowing qualifying businesses and tenants to avoid sales tax on listed equipment and power infrastructure. This section covers qualifying for-profit businesses and tenants in data centers with at least 20,000 square feet for working servers, including centers in counties with more than 800,000 people when the section requires that location. Applicants must show that the facility has at least 1.5 megawatts of available power when that requirement applies. The program limits the number of approved applications and uses the date received to decide priority. The listed eligible server equipment is original equipment installed on or after June 9, 2022, with separate limits for tenants; the text does not list replacement server equipment in those definitions. Businesses and tenants must meet job, reporting, and other program requirements, or previously exempted taxes may become due. The section takes effect July 1, 2026. No new certificates may be issued on or after July 1, 2028, and the exemption expires July 1, 2038. Tenant equipment must be installed on or within 10 years of June 9, 2022, as stated in the section.
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Where it stands
- Introduced
- Passed Senate
- Passed House
- To Governor
- Became Law
Looking ahead
No hearings or votes scheduled.
History
- 2026
- Apr 1Effective date 6/11/2026*.Latest
- Apr 1Chapter 266, 2026 Laws.Major
- Apr 1Governor Bob Ferguson signed.Became Law
- Mar 13Delivered to Governor.To Governor
- Mar 12Speaker signed.Passed House
- Vote recorded 3rd Reading & Final Passage (#15). Result: pass.Lower
- Vote recorded 2663 Orcutt Pg 2 Ln 25 (#14). Result: fail.Lower
- Mar 12President signed.Passed Senate
- Mar 12Third reading, passed; yeas, 51; nays, 46; absent, 0; excused, 1.Minor
- Mar 12Rules suspended. Placed on Third Reading.Minor
- Mar 9Rules Committee relieved of further consideration. Placed on second reading.Minor
- Mar 9Referred to Rules 2 Review.Minor
- Mar 7Minority; do not pass.Minor
- Mar 7FIN - Majority; do pass.Minor
- Mar 7Executive action taken in the House Committee on Finance at 9:00 AM.
- Mar 4Public hearing in the House Committee on Finance at 8:00 AM.
- Mar 3First reading, referred to Finance.Minor
- Feb 28Third reading, passed; yeas, 26; nays, 23; absent, 0; excused, 0.Minor
- Vote recorded 3rd Reading & Final Passage (#26). Result: pass.Upper
- Feb 28Rules suspended. Placed on Third Reading.Minor
- Feb 28Floor amendment(s) adopted.
- Feb 281st substitute bill substituted (WM 26).Major
- Feb 27Placed on second reading by Rules Committee.Minor
- Feb 23Passed to Rules Committee for second reading.
- Feb 19Minority; without recommendation.Minor
- Feb 19Minority; do not pass.Minor
- Feb 19WM - Majority; 1st substitute bill be substituted, do pass.Major
- Feb 19Executive action taken in the Senate Committee on Ways & Means at 4:00 PM.
- Jan 26Public hearing in the Senate Committee on Ways & Means at 4:00 PM.
- Jan 20First reading, referred to Ways & Means.Introduced
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