Legislators in the Michigan House of Representatives have approved extended tax breaks for data centers in a move aimed at attracting business from the hyperscalers.

A new law, HB 4906, exempts operators that invest $250 million or more on digital infrastructure from sales and uses taxes on equipment until at least 2050.

It was approved 64-45 in a vote led by the Democrats, but with support from many Republican lawmakers.

Rep. Joey Andrews, who sponsored the bill, said: “As technology continues to advance, it is imperative that legislation allows the state to remain competitive economically.

“Southwest Michigan’s abundant freshwater resources and reliable nuclear energy infrastructure make it an ideal destination for data centers, particularly with the growing demand for such facilities.”

The bill extends 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 establishes the same exemptions for enterprise data centers.

As well as investing $250 million, companies will have to create and maintain a minimum of 30 in-state jobs paying at least 150 percent of the prosperity region’s median wage to qualify for the tax break.

The size of these commitments means beneficiaries are likely to be the bigger players in the market, such as the hyperscale developers which have been rapidly building out AI data centers in recent months.

Though the legislation passed the Michigan Senate in May, its passage through the House has been delayed due to concerns raised by environmental campaigners about the amount of energy and water used by data centers.

“The legislation voted out today falls far short of ensuring our rates won’t go up and we won’t see the rush to build additional fossil fuel plants to power these data centers, said Bob Allison with the Michigan League of Conservation Voters.

Michigan doesn’t currently 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.