US data center tax incentive and regulation debates

Legislators in North Dakota and Nevada are debating reforms to tax incentives and transparency requirements for the data center industry.

In North Dakota, lawmakers are preparing for a special session to consider a proposal to temporarily ban nondisclosure agreements (NDAs) between data center developers and public officials. This follows a significant increase in sales and use tax exemptions for information technology equipment, which rose from $5.4 million in 2021 to over $65 million last year. State Tax Commissioner Brian Kroshus noted that these exemptions have far exceeded original legislative expectations.

In Nevada, officials are proposing various reforms to address the strain on water and power resources caused by industry growth. In North Las Vegas, efforts have been made to end tax breaks and halt new construction. Meanwhile, Storey County has submitted a proposal to the state legislature to shorten the duration of incentives, impose stricter spending requirements, and mandate more public disclosure regarding energy and water use. These debates are occurring as the rise of artificial intelligence accelerates data center expansion.