The Michigan Senate has passed a bill to extend tax breaks for data centers in the state.
Michigan Senator Kevin Hertel this week announced the Michigan Senate passed Senate Bill 237, a bill he put forward to “incentivize tech companies to locate in Michigan.”
After passing 142-24, the bill now heads to the Michigan House for consideration.
As previously reported, Senate Bills 237 and 238, and companion House Bills 4905 and 4906 aim to expand sales and use tax exemptions for data centers in Michigan. Both House Bills have passed their third reading and have been referred to the committee of the whole.
The bills would extend the sunset on a use and sales tax exemption from the current 2035 date to 2050 – or 2065 if the data center is located on a brownfield site or a location that was used primarily as a power plant for electricity – and establish the same exemptions for enterprise data centers.
To qualify for the exemption, the data center would have to make at least $250 million in capital investments, as well as create and maintain a minimum of 30 in-state jobs paying at least 150 percent of the prosperity region’s median wage.
“Data centers power everything from email and social media to search engines and online banking, and with increased investments in artificial intelligence, there is a growing demand for more data generation, processing, and storage,” said Sen. Hertel. “Not only do data centers serve as the backbone of our increasingly digital world, but they are economic engines that help fuel long-term community growth. These multi-billion dollar investments translate into greater state and local tax revenue that goes to funding our schools and our roads.”
Fiscal impact reports suggest the bills would reduce state and local revenue by an “unknown amount” that would likely be at least $52.5 million through Fiscal Year 2050-51 and at least $42.5 million through to 2061-62.
Hertel said his bill has support from groups including the Detroit Regional Chamber of Commerce, Grands Rapids Chamber of Commerce, General Motors, Consumers Energy, DTE Energy, Michigan Regional Council of Carpenters and Millwrights, Michigan Laborers District Council, Construction Association of Michigan, Economic Development Leaders for Michigan, Net Choice.
Michigan doesn’t have a major data center market. Switch is the most notable player in the state; 365, Bedrock, and Sentinum are also present. An unnamed developer is planning a 280-acre campus in Benton Township.
In 2022, then-Michigan Democratic Representative Yousef Rabhi tried to introduce two bills that would have eliminated sales and use tax exemptions for data centers. He previously called data center tax exemption bills “corporate cronyism at its finest.”
