Healey Halts Data Center Tax Incentives
Massachusetts Governor Maura Healey has paused the state's data center sales tax incentive program. The administration also released a comprehensive framework designed to ensure future data center development does not increase energy costs, strain infrastructure, or negatively impact public health and the environment. New data centers will be required to develop or directly procure their own clean energy resources and cover the full cost of any new energy infrastructure.
Massachusetts Governor Maura Healey has announced a temporary halt to the state's data center sales tax incentive program. The Healey administration will temporarily stop accepting applications for the Massachusetts Qualified Data Center Sales and Use Tax Exemption, which was created by the Legislature in 2024, until stronger protections for residents, businesses, and host communities are established.
Alongside the pause, the administration unveiled a comprehensive framework for responsible data center development, described as one of the nation's most robust. This framework sets clear expectations for future projects, particularly emphasizing a "Bring Your Own Clean Energy" approach, where developers must procure or generate their own clean energy and cover all associated new energy infrastructure costs. This aims to prevent increased energy costs for existing utility customers and alleviate grid strain.
The guidelines also address water consumption, mandating data centers be built in areas with sufficient water and wastewater capacity, encouraging water-efficient cooling, and prioritizing existing water users during drought. Additional provisions focus on minimizing air emissions and noise, reducing reliance on diesel generators, promoting high-quality jobs through labor agreements, and ensuring community engagement. Developers receiving public incentives are expected to negotiate community benefit agreements.
Lieutenant Governor Kim Driscoll, Energy and Environmental Affairs Secretary Rebecca Tepper, and Economic Development Secretary Eric Paley all underscored the administration's commitment to supporting data center investment while ensuring projects are developed responsibly and provide clear benefits to local communities. The framework was developed following extensive discussions with a wide range of stakeholders and has been praised by environmental and labor organizations.