A long-awaited sales tax exemption for data centers based in Massachusetts just went live on Thursday, according to the state office of economic development.
Qualified data centers wouldn’t need to pay the 6.25 percent sales tax for 20 years on equipment, computer software, electricity use, or construction costs under the final regulations.
State officials had been working on crafting the tax exemption since the Legislature required it in the 2024 economic development measure that Gov. Maura Healey signed. But 18 months after that law was signed, the finalization of the tax break comes at a fraught time for the artificial intelligence industry as backlash against these facilities – and the sheer volume of resources they require – mounts across the country.
In Massachusetts, Lowell residents sued state regulators just last week over past approvals for a large data center there. Lowell also enacted the state’s first data center moratorium in March.
In order to be eligible for the tax exemption, data centers must be at least 100,000 square feet, create at least 100 jobs, and invest at least $50 million.
Eric Paley, secretary of economic development, said in a brief interview that he’s aware of the concerns in Lowell and that “every community is going to look at this differently.”
“When it comes to data centers here in the state, we believe as long as data centers are thinking about internalizing the overall externalities, particularly around electricity, but water, too, we’re very open to working with data centers,” Paley said. “Those incentives are pretty strong incentives for those developers, and the AI infrastructure is important to our state’s long term economic success. We’re prepared to invest in that area.”
Published by MassINC