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Last Updated: 4/23/2018

Qualified Data Centers

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Companies that build or refurbish data centers may qualify for a sales tax exemption for 20 years on enterprise information technology equipment, software, and electricity used to operate the data centers.

To receive this exemption, you must be either of the following:

What data centers qualify for this exemption?

New data centers must:

  • Be at least 25,000 square feet

  • Have $30,000,000 invested within 48 months

Refurbished data centers must:

  • Have at least 25,000 square feet that has been rebuilt or modified

  • Have $50,000,000 invested within 24 months

For more information, see Data Centers on the DEED website.

What purchases qualify for the exemption?

This exemption applies to computing, networking, or data storage equipment, software, and electricity used to operate or maintain a qualified data center. Examples include:
  • Computers, servers, and routers (including installation and maintenance agreements)
  • Software (including installation and maintenance agreements) used in the operation of a data center
  • Rack systems, trays, and cable
  • Cooling systems, cooling towers, and other temperature control infrastructure
  • Power infrastructure to transfer, distribute, and manage electricity
Note: For a software purchase to qualify for refund, it must perform one or more of the following functions:
  • Operate, maintain, or monitor the enterprise information technology equipment located in a qualified data center
  • Manage, manipulate, analyze, collect, store, process, distribute, or allow access to large amounts of data at the data center, or perform other similar functions

When you purchase qualifying equipment and computer software, you must pay sales or use tax and then apply for a refund. Use Form ST11, Sales and Use Tax Refund Request and Multiple Period Amended Return. Follow the instructions to request the refund. You may file two refund requests per calendar year.

Once the data center is certified by DEED, you may purchase electricity exempt from sales tax. To claim this exemption, give your supplier a Form ST3, Certificate of Exemption. Use Form ST11 to request a refund for sales tax paid on electricity used on or after the date the facility became a qualified data center.

What purchases do not qualify for the exemption?

Other equipment purchases not covered by the exemption are taxable. These items are taxable even if they are required for the facility to become a qualified data center. Examples include:

  • Fire suppression systems
  • Office furniture
  • Security systems 

When do I qualify for the exemption?

DEED must certify your facility before you qualify for the exemption. You must qualify for the exemption before you can request any refunds.

DEED will notify you when your facility is certified. Once it is certified, you can apply for refunds on qualifying purchases made before your certification.

What if a data center has multiple owners?

Each owner must apply separately for a refund of the tax paid on their purchases of equipment and software.

How long does this exemption last?

You can receive this exemption for 20 years – starting with your first purchase of exempt equipment or software – or until June 30, 2042, whichever is earlier.


Minnesota Statute 297A.68, subd. 42 – Qualified data centers

Revenue Notice 16-07, Sales and Use Tax – Exemptions – Qualified Data Centers

Fact Sheet 129, Utilities Used in Production

Fact Sheet 134, Computer Software

Qualified Data Center FAQs