Massachusetts Qualified Data Center Sales and Use Tax Exemption

The Massachusetts Qualified Data Center Sales and Use Tax Exemption supports the development of data centers within Massachusetts by providing an exemption on the sales and use tax that otherwise would be paid on eligible expenditures.

Notice Regarding the Qualified Data Center Sales and Use Tax Exemption 

On June 25, 2026, the Healey Administration released a statement of expectations and framework for the responsible development of data center projects in Massachusetts. The framework is intended to provide clarity to data center developers considering projects in Massachusetts, including responsible development practices and expectations for applicants seeking the sales and use tax exemption made available to owners or operators of data centers under M.G.L. c. 23A, § 70 and 64H, § 6(zz) (the “Qualified Data Center Tax Exemption”). 

The Executive Office of Economic Development (EOED) is currently evaluating existing regulations and processes to ensure alignment with the framework’s objectives. 

EOED will not be accepting applications from entities seeking certification to claim the Qualified Data Center Tax Exemption until further notice. 

Any interested parties that wish to be notified of updates regarding the Qualified Data Center Tax Exemption may send an email to [e-mail].

About the Tax Exemption

Approved qualified data centers are eligible for a 20-year tax exemption commencing either the date a completed application is received by EOED or a prospective date identified in the application, not to exceed five-years (the qualification period).

A qualified data center may use the tax exemption for the following eligible expenditures* during the qualification period:

1. Eligible data center equipment for use in a qualified data center;
2. Computer software for use in a qualified data center;
3. Electricity for use or consumption in the operation of a qualified data center; or
4. Construction costs incurred for the construction, renovation or refurbishment of a qualified data center.

*Note: Definitions of “eligible expenditures,” including eligible data center equipment, computer software and construction costs, are governed by M.G.L. c. 64H § 6(zz) and 400 CMR 9.02. Please consult these legal authorities (see "legal authority" below) for further details on eligible expenditures. 

Eligibility Criteria

To qualify for the tax exemption, an applicant must be certified by EOED as a qualified data center. Applicants seeking certification as a qualified data center must own or operate a data center facility located in Massachusetts and meet the following criteria:

1. The applicant must construct or substantially refurbish a data center facility that is used to house computer information technology equipment, networking, data processing or data storage, including, but not limited to, servers and routers for the storage, management and dissemination of data and information;
2. The total aggregate square footage of the qualified data center buildings must be at least 100,000 square feet comprised of one or more data center buildings on a single parcel or contiguous parcels;
3. The applicant must maintain or create at least 100 jobs located in Massachusetts within five years of certification; and
4. The applicant invests at least $50 million on “qualified data center costs” within 10 years of certification, as defined in M.G.L. c. 64H § 6(zz) and 400 CMR 9.02.

Reporting Requirements

A certified qualified data center must submit a report by September 1 of each year to EOED that includes the following information:

• The actual number and type of jobs created and maintained at the qualified data center and at other locations in Massachusetts;
• The actual investments in qualified data center costs associated with the qualified data center;
• A cost accounting report detailing the actual eligible expenditures made that are exempt under the tax exemption.
• Any other information EOED requires to determine the qualified data center remains eligible for the tax exemption.

Legal Authority