Utah's Data Center Tax Break

How it works

Utah's data center tax break

Three separate businesses run inside a data center. Almost nothing they buy gets taxed. Then Utah taxes the software subscription you pay for every month.

Rod Moser · Candidate, Utah House District 45
Written 29 August 2026. Every claim on this page links to a public record.

The company that puts up the building pays sales tax on concrete and steel. Nothing on the generators, the cooling and the electrical gear inside.

The company that wheels in the servers pays nothing at all. Utah added tenants to the exemption in 2020.

And Utah taxes the software subscriptions you buy.

Three companies, one building

The industry calls it colocation

A data center looks like one company's building.

It's usually three businesses stacked inside one shell, and which one you're looking at decides who pays.

Layer oneThe operator builds the shell

Puts up the building, the power and the cooling, then divides the floor into space you can lease, about the way a storage place does. In Utah that's Aligned, Novva, DataBank, QTS.

Layer twoThe tenant brings the machines

Leases floor space and rolls in its own servers, storage and graphics processors. The statute calls this company an occupant.

Layer threeThe customer buys the capacity

A software company rents computing power from the tenant to run its product, then sells that product to you.

Meta, Google and Oracle run all three layers themselves. That's a hyperscaler.

But the law is written for the version where the layers belong to separate companies. So that's how I'll walk it.

Where the tax gets charged

Following a dollar from the concrete to your phone

Who is buying	What they buy	Sales tax
Operator	Concrete and steel for the shell	Charged
Operator	Generators, transformers, switchgear, chillers, racks	None
Tenant	Servers, storage, graphics processors	None
Software company	Rented computing power	None
A Utah family	The software subscription	Charged

Sales tax gets charged on the construction materials at the start and on your subscription at the end. Everything expensive in between is exempt.

What the law says

Utah Code 59-12-104, exemption 84

"amounts paid or charged for a purchase or lease made by a qualifying data center or an occupant of a qualifying data center of machinery, equipment, or normal operating repair or replacement parts" Utah Code 59-12-104(84), effective 1 January 2026

Those marked words are the 2020 change.

Before Senate Bill 114 the exemption belonged to the building. After it, the exemption belongs to every tenant inside the building too.

The state's own economic development office said why at the time. The change, its spokesman told a development group that December, "accommodates the industry's shift toward co-location models, allowing tenants to claim exemptions on their own equipment purchases."

The exemption covers machinery and equipment, not construction materials. That's why the concrete still gets taxed. And it's a sales and use tax exemption, so buying the gear in another state and trucking it in doesn't change anything either.

Nobody's working a loophole here. The law was written this way on purpose, in public.

One building qualifies. Nobody after that does.

Where the 150,000 square foot test applies

To qualify as a data center under Utah law, a building has to be new construction, in Utah, on land the operator owns or leases, and total 150,000 square feet or more.

No minimum investment. No minimum number of jobs. No wage floor. None of that is anywhere in the definition.

That test is about the building, and it gets passed once.

After that, every tenant who ever leases space inside buys equipment tax free without meeting a single requirement of their own. No cap on how many tenants. No cap on how much equipment.

In Georgia, Virginia, Texas and Ohio, a company earns the break by qualifying itself. In Utah, one building qualifies once and shares it with everybody who walks in.

Those four states each require an investment number and a job count, and three of the four require a wage floor tied to the local average. They also make a company apply to the state and get certified before it can use the exemption.

That paperwork is why they can publish a yearly figure for what the break costs them and we can't.

Utah applies the exemption at the register. No company applies to the state, nobody gets certified, and no agency keeps a list. So there's nothing to add up.

Georgia projects about $2.5 billion in state and local revenue given up in the 2026 fiscal year. Its own auditors separately measured $474 million in forgone state revenue for 2025. Different measures, both public, both large. Virginia counted $1.94 billion. Ohio counted $1.6 billion.

Utah is one of seven states with no published figure at all.

A reporter asked our State Auditor in July whether a taxpayer can find out what a project gets.

Her answer was four words. "Not easily, yet."

What I'm asking for

Not repeal

I'm not asking anybody to run these companies out of Utah. Data centers are real infrastructure, and some of this investment would be worth having on terms we picked.

We just never picked terms. We wrote an exemption with one measurement in it and then stopped looking.

1. Count it. Turn the exemption into a refund, or require certification, so the state can publish a number every year the way Georgia and Virginia do.
2. Put a job number and a wage floor on it, the way Texas and Ohio and Virginia do.
3. Put an end date on it, so a future Legislature has to look at the math again instead of inheriting it.

Any one of those is a bill. All three already passed in states run by people who agree with my opponent about nearly everything else.

This is sales tax, not property tax

Everything above is sales tax, which the Legislature controls.

The forty year property tax deal at the Meta campus in Eagle Mountain is a different system, granted by local taxing entities, and it deserves its own page. Mixing the two is the most common mistake in this argument, including from people on my side of it.

Sources

All public. Go check me.

• Utah Code 59-12-104 · the exemption, including the words "or an occupant"
• Senate Bill 114 (2020) · added tenants and set the 150,000 square foot definition
• Fiscal note for S.B. 114 · estimated impact on state revenue: zero
• Fiscal note for S.B. 61 (2010) · the original exemption, projected at $38,700 a year
• Governor's Office of Economic Development, December 2020 · why the colocation change was made
• Utah State Tax Commission, Publication 64 · remotely accessed software is taxable when used in Utah
• Tax Commission ruling 01-030 · hosting access is not a taxable transaction
• KUTV, July 2026 · the State Auditor on whether taxpayers can find the cost
• Georgia Department of Audits · the $474 million state figure for 2025
• Good Jobs First, June 2026 · what other states have counted
• Ohio Revised Code 122.175 and Texas Tax Code 151.359 · what those states require

Find an error on this page and write to Rod@utahgrit.com. I'll fix it and say what changed.

Rod Moser · Utah House District 45 · UtahGrit.com
Paid for by Elect Rod Moser