Minnesota’s Data Center Sales Tax Incentives Lead the Country

Minnesota offers some of the most competitive Data Center Sales Tax Incentives in the United States, making it easy for companies to expand into the Minnesota Technology Corridor.

To qualify for these tax exemptions, a business must open a data center that is at least 25,000 square feet and invest at least $30 million within 48 months. However, the tax breaks can last for up to 20 years and cover tax exemptions on almost all of the property inside.

“It’s highly competitive,” Colleen Eddy, Metro Regional Business Development Manager for the Minnesota Department of Employment and Economic Development (DEED). “A lot of companies that site data centers review the state’s tax exemption and then reach out to us.”

Whether your business is planning to relocate to Minnesota or wants to expand its operations, these tax incentives can make moving more profitable. Read about what they cover and the value they provide.

The Data Center Sales Tax Incentives Cover Equipment and Energy Use

Companies that qualify for the data center tax incentives will be exempt from paying sales tax on the purchase of various essential operational products. These include:

• Computers and servers
• Cooling and energy equipment
• Energy use
• Software

The state general tax rate is 6.875%, with some local municipalities adding additional sales taxes. The data center tax break offers considerable savings for hardware, software, and any energy used.

“This is a crucial piece to attracting data centers,” says Eddy. “The potential savings pairs with the natural cooling from the Minnesota climate and makes operating a data center here very desirable.”  

The data center sales tax incentives were first launched in 2011 and have been an effective tool for business attraction. Just south of the Minnesota Technology Corridor, Meta is building a data center in Rosemount that will be operational in 2026. In November 2024, Amazon Data Services bought a 348-acre data center site in Becker.

Minnesota Offers Additional Sales Tax Exemptions for Businesses

Businesses moving to the Minnesota Technology Corridor can enjoy additional tax breaks beyond the data center sales tax incentives. Here are a few common operational purchases that Minnesota does not tax:

• Personal property
• Inventories
• Utilities
• Internet access
• Information services
• Custom-created software

Savings from these investments have helped companies like Infinite Campus thrive in Minnesota. Anoka and Washington Counties, just north of Minneapolis and comprising the Minnesota Technology Corridor, have become tech hubs as new companies open there. An estimated 7.4% of the workforce is in the technology field, helping Minnesota rank 15th in the United States for overall tech employment.

“Washington County has seen a positive snowball effect from the recent tech investment,” says Chris Eng, Economic Development Director of the Washington County Community Development Agency. “More people are moving to the region because they know there is tech work here. This, in turn, brings more tech companies because they know they can pull from a viable workforce.” 

Apply to Receive Data Center Sales Tax Incentives

Companies that are interested in moving their data centers to Minnesota can complete a Data Center Certification Application to start the process. If you have any questions about these tax incentives, contact our team at the Minnesota Technology Corridor. Not only can we help you better understand the application process, but we can also serve as a partner through the site selection and relocation process.

Once your application is approved, your organization will work with the Minnesota Department of Revenue to receive the tax exemption.

Learn More About the Minnesota Technology Corridor

Minnesota is one of the best states to move your data center, but the Minnesota Technology Corridor is the best region. It strikes an ideal balance between offering affordable land and competitive tax exemptions while also offering you easy access to Minneapolis. Your business can enjoy 300 days free of cooling costs annually while also hiring from one of the largest universities and college-educated workforces in the country.   

Discover the location advantages of moving to the Minnesota Technology Corridor and consider moving your business here.