Massachusetts Sales and Use Tax Exemption Expanded to Include Qualified Data Center Purchases

Massachusetts Expands Tax Exemptions for Data Centers

Massachusetts has new sales tax exemptions for qualified data centers, signed by Governor Maura Healey on November 20, 2024. The exemption includes purchases of computers, networking equipment, software, electricity, and construction materials used in these facilities, making Massachusetts one of many states offering such incentives.

Eligibility Requirements for Data Centers

To qualify for the Massachusetts exemption, a data center must:

1. 1. Be located in Massachusetts.
2. 2. Include at least 100,000 square feet of space on a single or contiguous parcel.
3. 3. Incur $50 million in construction or refurbishment costs within 10 years of certification.
4. 4. Maintain at least 100 jobs in the state.
5. 5. The facility must also feature robust power systems, fire suppression, and enhanced security measures, such as restricted access and surveillance.

Scope of Tax Exemptions

Certified data centers can benefit from a 20-year exemption on:

• – Equipment like servers, networking hardware, cooling, and power systems.
• – Software, both prewritten and customized.
• – Electricity for operations.
• – Construction-related expenses, including labor and materials.
• – Any other personal property or equipment used or consumed in the operation and maintenance of the qualified data center

Purchases made before certification approval may be subject to sales tax, but vendors can apply for abatements to reclaim overpaid taxes.

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