Sales tax savings for data centers topped $65 million in 2025
North Dakota lawmakers are reviewing a state tax incentive for data centers after reported sales tax savings reached over $65 million in 2025. The incentive, adopted in 2021, exempts qualifying equipment and software, and a committee is now studying its impact ahead of the 2027 legislative session. Stark Power's proposed Mandan project, which would benefit from the incentive, is projected to bring significant local investment and property tax revenue to Mandan Public Schools.
North Dakota lawmakers are scrutinizing a state tax incentive designed to attract data centers, following a report revealing over $65 million in sales tax savings for data center owners and operators in 2025. During a recent committee meeting, Brian Kroshus, North Dakota Tax Commissioner, noted that the Legislative Assembly likely "couldn’t have envisioned what this would become" when the exemption was adopted in 2021. The incentive covers qualifying equipment and software for data center operations, excluding building construction, and also benefits tenants leasing space.
The reported $65 million figure for 2025 activity does not encompass all exempt activity, as exemptions for tenants are not required to be included in annual reports. As an example of the incentive's impact, Stark Power's proposed data center project in Mandan is expected to generate $40 million to $50 million in annual local investment, with approximately 48% of its property tax revenue earmarked for Mandan Public Schools.
The Legislature’s Tax Reform and Relief Advisory Committee is currently studying the incentive's effectiveness and implications. This review is being conducted in preparation for the 2027 legislative session, suggesting potential modifications or reevaluation of the tax policy in the coming years.