Here's Why Wyoming Gives Tax Breaks To Huge Data Centers
Wyoming enacted sales tax exemptions for large data centers in 2010 to attract tech companies, with Microsoft notably benefiting from incentives. An attempt in 2021 to repeal these exemptions, led by Rep. Clark Stith, was defeated, despite concerns over unrealized tax revenues and fairness to small businesses. The tax policy continues to be a point of debate, with some state Republicans now raising concerns about data center demands on the power grid and water resources.
Wyoming lawmakers in 2010 approved significant sales tax exemptions for large data centers, aiming to attract major tech companies and compete with states like Texas. Then-Rep. Peter Illoway (R-Cheyenne) and co-sponsor Rep. James Byrd (D-Cheyenne) championed House Bill 67, requiring data centers to invest at least $5 million in capital costs and create an "appropriate" number of jobs, with the Wyoming Business Council providing certification.
In 2021, Rep. Clark Stith (R-Rock Springs) led an effort to repeal this sales tax exemption, arguing it created an unfair advantage for large corporations over small businesses and resulted in potentially hundreds of millions in lost tax revenues, with many data centers failing to report their savings. However, this repeal attempt faced strong opposition from economic development groups like Cheyenne LEADS, Cheyenne-area local government leaders, and advocates from the energy, steel, and tech industries, and ultimately failed in the House Revenue Committee.
While the exemption remains in place, the debate over data centers in Wyoming has intensified. Critics, including Rep. Chuck Gray (R-Casper), now voice concerns about the increasing demands of artificial intelligence on the state's power grid and water resources. The issue has become a "wedge" within the Republican party, with some calling for a slowdown or moratorium on data center approvals, even as President Donald Trump advocates for more data center construction nationwide.
Despite the controversy, data centers have contributed significantly to local economies, with Cheyenne LEADS reporting over $10 million in property taxes to Laramie County and $111.8 million in other sales and use taxes from 2012-2024. Former Rep. Seth Carson (D), who co-sponsored the original bill, expressed surprise at the industry's growth and wondered if he would make the same decision today, highlighting the evolving understanding of the sector's impact.