Senate Bill 98 Data Center Tax Exemption
Kansas Senate Bill 98, passed in the 2025 legislative session, offers sales tax exemptions to data center projects meeting specific investment and operational requirements. While proponents see it as a vital tool for economic development to attract companies, opponents question the wisdom of tax incentives given potential strain on state resources. Lawmakers remain divided on the bill's effectiveness, with ongoing discussions about data center development in the state.
Senate Bill 98, a Kansas state law passed during the 2025 legislative session, was designed to attract data center developers by offering sales tax exemptions to qualifying projects that meet specific investment and operational requirements.
Over a year later, lawmakers remain divided on the bill's success. Senator Kenny Titus, who voted against the bill, still questions whether these incentives are the right approach to economic development, despite acknowledging a better understanding of data center operations. He emphasizes the strain data centers put on resources and points to measures like the large load tariff as a way to protect users, maintaining his opposition to tax breaks for these projects.
Conversely, supporters of SB 98 view it as a crucial tool for Kansas to compete with other states in attracting large-scale investments. They argue the state's role is to make Kansas an attractive prospect for companies, leaving the final decision on specific projects to local communities. The objective, they state, is to make the state "open for business" and facilitate discussions with potential developers.
Despite the division on tax incentives, both sides agree that the state has gained significant knowledge about data centers since the bill's passage. The conversation regarding data centers and the effectiveness of Senate Bill 98 is expected to continue.