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Session of 2026
SENATE BILL No. 526
By Committee on Assessment and Taxation
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AN ACT concerning data centers; relating to the sales tax exemption for
the construction or remodeling of a qualified data center; requiring any
such data center to be located on land that was zoned and classified for
industrial or manufacturing uses on July 1, 2025, if such land was
subject to zoning regulations by a local zoning authority on or before
such date; amending K.S.A. 2025 Supp. 74-50,331 and repealing the
existing section.
Be it enacted by the Legislature of the State of Kansas:
Section 1. K.S.A. 2025 Supp. 74-50,331 is hereby amended to read as
follows: 74-50,331. For purposes of K.S.A. 2025 Supp. 74-50,331 through
74-50,333, and amendments thereto:
(a) "Commencement of construction" means the date that
construction, reconstruction, enlargement or remodeling of a qualified data
center by a qualified firm commences, as determined in the agreement
required by K.S.A. 2025 Supp. 74-50,332, and amendments thereto.
(b) "Commencement of operations" means the date that the qualified
firm commences operations at a qualified data center, as determined in the
agreement required by K.S.A. 2025 Supp. 74-50,332, and amendments
thereto.
(c) "Data center equipment" means equipment or software purchased
or leased for the processing, storage, retrieval or communication of data,
regardless of whether the property is or is not affixed to or incorporated
into real property, including the following:
(1) Servers, routers and connections and computer equipment,
monitoring and security equipment or systems;
(2) equipment used in the operation of the qualified data center,
including, but not limited to, backup generators, component parts,
installations, refreshments, replacements and upgrades;
(3) all equipment necessary to cool and maintain a controlled
environment for the operation of the computer servers and other
components of the qualified data center, including, but not limited to,
chillers, mechanical equipment, refrigerant piping, fuel piping and storage,
adiabatic and free cooling systems, cooling towers, water softeners, air
handling units, indoor direct exchange units, fans, ducting and filters;
(4) all water conservation systems, including facilities or mechanisms
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that are designed to collect, conserve and reuse water;
(5) all computer server equipment, chassis, networking equipment,
switches, racks, fiber optic and copper cabling, trays and conduit;
(6) all conduit, ducting and fiber optic and copper cabling directly
related to connecting one or more distributed qualified data center
locations regardless of whether located inside or outside a data center;
(7) all software; and
(8) other personal property that is essential to the operations of a
qualified data center, excluding such property used in the administration of
the qualified data center.
(d) "Department" means the department of commerce.
(e) (1) "Eligible data center costs" means expenditures for the
development, acquisition, construction and operation of a qualified data
center by a qualified firm, including, but not limited to, costs of land,
buildings, site improvements, data center equipment, data center
equipment acquisition and permitting, lease payments, site characterization
and assessment, engineering and design used directly and exclusively for a
qualified data center.
(2) "Eligible data center costs" does not include the cost of electricity.
(f) "New jobs" means newly created jobs with a qualified firm at a
qualified data center or directly associated with a qualified data center
filled by Kansas residents and the primary work locations of such jobs are
in Kansas.
(g) "Qualified data center" means one or more buildings that are:
(1) Constructed, reconstructed, enlarged, remodeled or leased to
house a group of networked computer servers in this state to centralize the
storage, management and dissemination of data and information pertaining
to a particular business, taxonomy or body of knowledge and such
buildings are connected to each other by fiber and associated equipment
required for operating a fiber transmission network between data center
buildings and internet points for the purpose of providing redundancy and
resiliency for the data center services provided in each building; and
(2) located on land that was zoned and classified for industrial or
manufacturing uses on July 1, 2025, by a local zoning authority. This
paragraph shall only apply to land that was zoned and classified for
particular uses on or before July 1, 2025, by a local zoning authority.
(h) "Qualified firm" means a business or an affiliate thereof that is
registered with the secretary of state and is engaged in the development,
operation or leasing of a qualified data center. "Qualified firm" does not
include a telecommunications carrier or local exchange carrier as defined
in K.S.A. 66-1,187, and amendments thereto, electing carrier as defined in
K.S.A. 66-2005(x), and amendments thereto, wireless services provider as
defined in K.S.A. 66-2019, and amendments thereto, or video service
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provider as defined in K.S.A. 12-2022, and amendments thereto.
(i) "Secretary" means the secretary of commerce.
Sec. 2. K.S.A. 2025 Supp. 74-50,331 is hereby repealed.
Sec. 3. This act shall take effect and be in force from and after its
publication in the statute book.
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