The Tax Tool Bringing Data Centers to Wisconsin
Data centers in Wisconsin are increasingly utilizing a tax incremental district (TID) tool, originally designed for other development types, to fund infrastructure and incentives. A recent state law, passed by lawmakers from both parties, specifically lifted the cap on the size of TIDs for data center projects, making them more attractive to developers. This change diverts new property tax growth from schools and services to directly support data center campus development.
Data centers are leveraging a unique tax tool in Wisconsin known as a Tax Incremental District (TID), which is a significant factor in their increased presence in the state. Historically, property taxes from new developments would flow to public services like schools and roads. However, with a TID, new tax revenue is sequestered for up to 20 years to finance roads, utilities, and incentives directly tied to the specific project.
Originally intended for projects such as housing developments and packing plants, the average Wisconsin TID has historically generated around $14 million in new value. This mechanism is now being applied to large-scale projects, including a proposed $15 billion data center campus. Last summer, state lawmakers from both parties passed a special law that lifted the existing cap on the potential value these TIDs can generate for data center projects, a move aimed at enhancing cities' competitiveness in attracting these facilities.