SB 98 Data Center Sales Tax Exemption Information
From the American Rural Heritage Foundation
SB 98 Data Center Sales Tax Exemption
Kansas Senate Bill 98 (SB98), enacted in 2025, establishes a 20-year state and local tax exemption designed to attract large-scale, permanent data center developments to the State of Kansas. The program incentivizes capital investment, high-wage job creation, and long-term utility partnerships while requiring comprehensive cybersecurity and critical-infrastructure risk review through the Kansas Intelligence Fusion Center (KIFC).
Who Can Qualify
To qualify for the SB98 Data Center Sales Tax Exemption Program, a company must demonstrate a commitment to substantial investment, responsible operations, and long-term presence in Kansas. These requirements ensure that participating projects meet the scale, security profile, and economic impact intended by the Kansas Legislature.
General Eligibility Requirements
Qualified companies must meet program requirements, including:
Invest at least $250 million in eligible data center costs and complete this investment within five (5) years after the commencement of operations
Creating twenty (20) new full-time jobs with Kansas residents within 2 years of commencing operations.
Must enter into a ten-year (10) electricity purchase agreement with the utility certified to provide retail electric service at the project location
Must adopt a comprehensive water plan that reflects responsible stewardship and long-term operational sustainability.
Every applicant must undergo a comprehensive review by the Kansas Intelligence Fusion Center (KIFC), with final approval from the Fusion Center Oversight Board. This review evaluates the project’s equipment, software, ownership structure, and operational purpose to ensure that it poses no undue risk to Kansas’ critical infrastructure.
Read More from the Kansas Department of Commerce at: https://www.kansascommerce.gov/program/business-incentives-and-services/sb-98-data-center-sales-tax-exemption/
A Tax Break Without a Proportionate Economic Return
SB 98 raises a fundamental question of economic efficiency: Is Kansas receiving enough public benefit to justify giving up potentially significant sales-tax revenue for 20 years?
Under the Kansas Department of Commerce guidelines, a data center can qualify for a broad sales-tax exemption covering construction, equipment, software, site costs, and installation and maintenance labor by investing at least $250 million and creating just 20 new Kansas jobs.
That means the minimum qualifying investment represents $12.5 million for every required permanent job. The program does not place a dollar cap on the sales-tax benefit or require a specific level of job creation beyond the 20-job threshold, and participants may also qualify for other state and local incentives.
While SB 98 includes compliance reviews and potential clawbacks, these safeguards largely ensure that companies meet the program's minimum commitments; they do not establish that the value of the tax revenue forgone will be outweighed by new wages, employment, tax revenue, or other measurable economic benefits.
Photo Credit: Evert Nelson/The Capital-Journal
Photo Credit: Evert Nelson/The Capital-Journal
