The Michigan state legislature has finalized a new bill that will extend tax breaks for data centers in an attempt to lure hyperscalers.

The bill passed the Michigan Senate in May. However, its passage through the Michigan House of Representatives was delayed due to environmental campaigners' concerns about the amount of energy and water used by data centers.

Michigan Capitol Building
– Michigan Senate

The House ultimately passed the bill in September. It was approved 64-45, with Democrats leading the vote but many Republican lawmakers supporting it.

Michigan Governor Gretchen Whitmer approved the bill on December 31, 2024.

Senate Bill 237 exempts operators that invest $250 million or more on digital infrastructure from sales and uses taxes on equipment until at least 2050.

As part of the requirements, the law will require data centers to employ sustainable and resilient design, construction, and operation through building certification firm Green Building Initiative Green Globes certification within three years of operation.

In addition, the bill extends the sunset clause on a use and sales tax exemption from the current 2035 date to 2050 – or 2065 if the data center is located on a brownfield site or a location that was used primarily as a power plant for electricity – and establishes the same exemptions for enterprise data centers.

Michigan currently lacks a major data center market. Switch is the biggest player in the state, with 365, Bedrock, and Sentinum also present. In November, Switch announced intentions to expand its data center in Grand Rapids, Michigan.

In October, Microsoft acquired 316 acres of land outside Grand Rapids, Michigan. However, Microsoft has not shared plans for the site, and township planning officials said they have yet to meet with Microsoft about any development project in the area.