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Qualified Data Centers

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What's New
Starting July 1, 2025, purchases of electricity do not qualify for exemption. Large-scale data centers qualify for exemption.

Sales Tax Exemption

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:

An owner of a qualifying data center that is certified by the Minnesota Department of Employment and Economic Development (DEED)
Located within a certified data center

What data centers qualify for the exemption?

New Data Centers

New data centers qualify for the exemption if they meet all the following:

At least 25,000 square feet
Invested at least $30 million within 48 months
Attain the three following building characteristics:
- Uninterruptible power supplies, generator backup power, or both
- Sophisticated fire suppression and prevention systems
- Enhanced security

Refurbished Data Centers

Refurbished data centers qualify for the exemption if they meet all the following:

Rebuilt or modified at least 25,000 square feet and
Invested at least $50 million within 24 months
Attain the three following building characteristics:
- Uninterruptible power supplies, generator backup power, or both
- Sophisticated fire suppression and prevention systems
- Enhanced security

Large-Scale Data Centers

Large-scale data centers qualify for the exemption if they meet all the following:

At least 25,000 square feet
One or more buildings connected to each other by fiber and associated equipment
Invested at least $250,000,000 by the facility and its tenants within 60 months beginning after June 30, 2025

For more information, see Data Center Sales Tax Incentives from the Minnesota Department of Employment and Economic Development.

When do I qualify for the exemption?

Your facility must be certified by DEED before you qualify for the exemption. You cannot request refunds until you qualify.

When your facility is certified, DEED will notify you. Once the facility is certified, you may apply for refunds on qualifying purchases made before your certification.

What purchases qualify for the exemption?

This exemption applies to:

Enterprise information technology equipment
Software

Examples include:

Cooling systems, cooling towers, and other temperature control infrastructure
Computing, networking, and data storage equipment (computers, servers, routers), including hardware installation and maintenance agreements
Power infrastructure to transfer, distribute, and manage electricity
Rack systems, trays, and cable
Software purchased for use in a data center, including installation and maintenance agreements.

What software qualifies for the exemption?

To qualify, the original software license or original software purchased must both:

Be loaded at the qualified data center
Remain on the enterprise information technology equipment located in the qualified data center

For example, qualifying software may:

Operate, maintain, control, or monitor the enterprise information technology equipment located in the 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
Be accessed through the data center servers, including remote access
Generate data that is stored on the data center servers and is accessible from outside the data center
Have its licensing centralized at the data center, with remote access to the data center servers for license verification

Do I need to provide software documentation to receive the exemption?

Yes. You must provide documentation to show the original license or original software was loaded and remains at the qualifying facility.

Examples include:

Installation invoices
Invoices with ship-to, delivery addresses, or installation location information
Software license agreements

Note: This list is not all-inclusive and we may require a combination of records. The records provided must be relevant, reliable, and consistent.

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Electricity Exemption Prior to July 1, 2025 [+]

Prior to July 1, 2025, electricity for qualified data centers was exempt from sales tax.

Use Form ST11, Sales and Use Tax Refund Request to request a refund for sales tax paid on electricity used on or after the date the facility became a qualified data center.

You may file a refund request for tax paid on electricity between the date your facility met the qualified facility requirements and the date your facility was certified.

What purchases do not qualify for the exemption? [+]

Some items are taxable even if they are required for the facility to become a qualified data center. Taxable items include:

Building materials
Diesel fuel or gasoline used in back-up generators
Electricity, effective July 1, 2025
Fire suppression systems
Office furniture
Security systems
Software that is not loaded at the data center
Software that is loaded at the data center but neither the original license nor the original software remain at the data center
Software maintenance agreements prior to July 1, 2013

How do I apply for a Sales and Use Tax refund? [+]

When you purchase qualifying equipment and computer software, you must pay sales or use tax and then request a refund. To request a refund, use Form ST11, Sales and Use Tax Refund Request and follow the instructions. You may file two refund requests per calendar year.

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.

What if I’m a tenant of a co‐located certified data center?

Each tenant‐business housed in a co‐located certified data center may submit their own refund request using Form ST11. You will need to show that your business is operating out of a qualified data center. You need to keep any agreements or other documents that verify this and have them available when you submit a refund request.

How long does the exemption last?

Once a facility is certified by DEED, they may request refunds for up to 20 years from the date of their first qualifying purchase, or by June 30, 2042, whichever is earlier.

For example, if the date of your first qualifying purchase was April 1, 2014, you may request refunds for purchases made on or before March 31, 2034.

What determines the date of my first qualifying purchase?

We determine the date of your first qualifying purchase by the first item on your refund request that qualifies for the refund. The purchase date of the first qualifying item becomes the date that you are eligible for the sales and use tax refund for up to 20 years.

Legal References and Resources

Minnesota Statutes

297A.68, subdivision 42, Qualified data centers

Revenue Notices

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

Publications

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Last Updated

August 12, 2025