Big news for data centers in the Sunflower State: Starting July 1, 2025, qualified data center projects in Kansas can take advantage of a major sales and use tax exemption. Thanks to Senate Bill 98, approved by Governor Laura Kelly on April 24, 2025, this new law offers a 100% sales tax break on eligible construction costs, equipment, and labor tied to building or remodeling qualified data centers.

This legislation replaces a previous bill (SB-51) and significantly raises the bar when it comes to supporting large-scale digital infrastructure in the state.

What’s Covered?

If your project qualifies, you’ll benefit from a full exemption from both state and local sales and use tax. That includes:

  • Equipment purchases
  • Installation and labor services
  • Remodeling and construction costs
  • Maintenance and repair work related to data center operations

And here’s the kicker: the exemption can last up to 20 years, offering serious long-term savings for qualified businesses.

Who’s Eligible?

To qualify, your project needs to fit a few key criteria. A “qualified data center” means one or more interconnected buildings specifically designed to store and manage networked computer servers and centralize data functions. These buildings must be fiber-connected and capable of supporting high-level internet redundancy and resiliency.

The business (or an affiliate) developing or operating the facility must also be registered with the Kansas Secretary of State.

What’s Required to Get the Incentive?

This isn’t a free-for-all—there are commitments involved:

  • Application and Agreement: You’ll need to apply to the Kansas Department of Commerce and sign a formal agreement if approved.
  • Construction Deadline: Projects must begin construction within 10 years of the agreement date.
  • Capital Investment: Expect to invest at least $250 million within five years of starting operations.
  • Job Creation: Create and maintain a minimum of 20 new jobs within two years.
  • Power Purchase Commitment: You’ll need to commit to buying electricity for 10 years from the local certified utility.
  • Sustainable Water Practices: Facilities must incorporate water conservation and reuse strategies, such as water-efficient fixtures and recycling water where possible.

What Happens After You’re Approved?

Once in the program, you’ll need to:

  • Cooperate with audits from the Kansas Department of Revenue
  • Share operational and performance data for state reporting and transparency
  • Undergo a review every five years to confirm your eligibility for continued benefits

Why KE Andrews?

At KE Andrews, we’ve helped clients across the country tap into millions in savings through state and local tax incentives. With over $100 billion in data center investment projected nationwide over the next five years, we know what it takes to guide your project through complex regulatory frameworks and maximize your savings potential. Whether you’re building from the ground up or expanding an existing facility, our team is ready to help you navigate Kansas’ new incentive program and ensure every dollar works harder for your business. Let’s talk about your data center strategy—and how we can help you benefit from Kansas’ latest incentive.