Washington state to end some data center tax incentives

Washington state has passed legislation to roll back certain tax incentives for data centers, effective July 1. Governor Bob Ferguson signed the bill, which eliminates a sales tax exemption for data center operators when replacing or refurbishing existing server equipment. However, new data centers will continue to be eligible for sales tax exemptions on their equipment. This move aims to curb the rapid growth of tech infrastructure in a state that currently hosts over 100 data centers, many attracted by favorable tax policies and abundant, inexpensive hydropower. A state working group report highlighted that increasing power demand from data centers could hinder Washington's efforts to decarbonize its energy system, maintain affordable and reliable service, and protect its environmental and cultural resources. The policy change reflects a broader trend among state governments seeking to regulate the data center industry's impact.