Data centers in North Dakota have received millions in sales tax breaks
North Dakota data centers have received tens of millions of dollars in state sales tax breaks in recent years, prompting legislative scrutiny. A state committee heard reports on the growth of these exemptions and potential future discussions regarding incentives. Lawmakers are also set to consider a bill to temporarily ban nondisclosure agreements for industrial projects.
Data center owners in North Dakota have benefited from state sales tax breaks totaling tens of millions of dollars over the last two years, a figure that has significantly increased amid growing public scrutiny of data center projects.
The Legislature’s interim Tax Reform and Relief Advisory Committee recently reviewed reports on these tax exemptions and incentives. State Tax Commissioner Brian Kroshus highlighted the exponential growth in sales and use tax exemptions for data center IT equipment, which escalated from $5.4 million in 2021 to over $65 million last year. The original tax exemption was approved in 2015 and updated in 2021.
Lawmakers, including Sen. Mark Weber, R-Casselton, acknowledged North Dakota's appeal to data centers due to its cold climate and reliable electricity, but suggested the state might be "giving away the store" with current incentives. Developers emphasize the substantial property taxes paid to local communities and the 332 permanent jobs created or retained from 2021 to 2025. Data centers near Harwood, Ellendale, Williston, Mandan, and Center were mentioned as examples.
In response to public criticism regarding data center size, water usage, and noise, the Republican-led Legislature will consider a bill to temporarily ban nondisclosure agreements between industrial projects and government officials. Nicholas Miller from the National Conference of State Legislatures noted that at least 38 states offer data center tax incentives, though some are now reconsidering them due to concerns over energy and water use, and lost tax revenue.