Data centers in Minnesota received more than $1 billion in tax breaks
Minnesota has provided more than $1 billion in sales tax exemptions to data centers since 2015, covering equipment, software, cooling systems and other costs. Residents near a proposed hyperscale data center in Farmington question whether the subsidies benefit taxpayers enough, while industry representatives argue incentives attract investment and economic activity.
A KSTP investigation found that Minnesota has refunded existing data centers more than $1 billion through sales tax exemptions since 2015. The subsidies have covered computers, software, cooling equipment and, until a recent legislative change, electricity; the state’s uncapped exemption does not require participating data centers to report job creation or economic-development outcomes.
The investigation focuses on a proposed hyperscale data center near Farmington, where resident Mohtashemi and neighbor Kathy Johnson say the project could replace the area’s quiet character with a 50- to 80-foot-tall facility and raises concerns about the use of taxpayer money. State Rep. Patty Acomb said future hyperscale projects could significantly increase the cost of the subsidies, while Brad Tietz of the Data Center Coalition defended incentives as a way to remain competitive and attract economic investment. The report also noted that many subsidy decisions occur through local city council and county commission meetings.