Our State & Local Tax Group examines Georgia legislation that would eliminate a key incentive for the build-out of new data centers in the state.
- Most of the bills target the sales and use tax exemption for capital investment in hardware and other equipment
- The proposals would end the exemption as soon as this spring or as late as December 31, 2026
- Another bill would pause data center construction until March 1, 2027
As part of an effort to balance the state budget and to pay for a proposed property tax relief package and individual income tax cuts, the Georgia General Assembly has introduced various bills that would—if passed—eliminate Georgia’s existing statutory sales tax exemption for hardware and equipment purchased for use in the state’s data centers.
Under current Georgia law, O.C.G.A. § 48-8-3(68.1) provides a state sales and use tax exemption for certain purchases of hardware and equipment made for use in qualifying data center facilities, known as “high-technology data centers.” In practical terms, this exemption lowers the effective costs of capital investment and improvements for data center operators by excluding eligible equipment and hardware from the state’s sales and use tax. As currently drafted, O.C.G.A. § 48-8-3(68.1) is set to expire on December 31, 2031.
However, a number of bills introduced during the current legislative session seek to suspend or sunset the exemption:
- Senate Bill 408 and Senate Bill 410: Both bills were introduced in January and seek to eliminate the sales tax exemption for data centers. SB 408 would eliminate the exemption beginning on January 1, 2027, while SB 410 would eliminate the exemption as soon as the bill becomes effective.
- Senate Bill 436: Introduced in January, SB 436 would suspend the issuance of any new sales tax exemption certificates related to O.C.G.A. § 48-8-3(68.1) from July 1, 2026 until June 30, 2027.
- House Bill 559: Introduced in February 2025 but carried over into 2026, HB 559 would sunset O.C.G.A. § 48-8-3(68.1)’s sales tax exemption on December 31, 2026.
The General Assembly has also drafted legislation, like House Bill 1012, that would pause data center construction in the state until March 1, 2027.
We will continue to monitor the status of these bills, along with additional bills introduced by the General Assembly that may affect our clients.
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