Last Thursday the Missouri state senate passed a bill that would provide tax benefits to new or expanding data center facilities operating in the state. The bill (SB 149) was sponsored by Republican state senator Mike Parson, and has provisions for state and local sales tax exemptions lasting up to 15 years for new facilities in the state. 

The bill received bi-partisan support within the Missouri legislature, and will now move to the governor’s desk for approval. Its passage, however, is far from guaranteed. As the St. Louis Business Journal noted, Gov. Jay Nixon, a Democrat, vetoed similar legislation last year.

Stand by for a veto?

The bill would provide state and local sales tax exemptions for certain qualifying equipment and utilities used in newly constructed data centers. In addition, these same exemptions would apply to taxes on the purchase of property for building a new data center facility. To receive the tax benefits, applicants must demonstrate that the data center project will result in at least $25 million in new investment at the facility and create 10 new jobs with wages of at least 150% of the county average over a three-year period.

The tax break proposal would also provide similar local and sales tax exemptions on existing data centers undergoing expansion, but “will only apply to the increase in expenditures for utilities over the previous year’s expenditures,” according to the bill’s text. To qualify, expanding facilities must prove “at least $5 million of new facility investment over a one-year period and create at least 5 new jobs with wages of at least 150 percent of the county average wage over a two year period.”

Newly located facilities are eligible to receive the incentives for a “maximum project period” of up to 15 years under the proposal, whereas existing data centers in Missouri can receive benefits for up to 10 years.

A recent analysis by CBRE revealed that 38 states nationwide already provide tax incentives to data center operators. Furthermore, many of these states, such as North Dakota, continue to revisit these incentives in an effort to enhance them and attract more business to the state.