Certain defined terms maintained, and data center exemptions modified.

A bill for an act

relating to taxation; sales and use; maintaining certain defined terms for other

purposes; modifying the exemption for data centers; amending Minnesota Statutes

2024, section 216B.02, by adding a subdivision; Minnesota Statutes 2025

Supplement, sections 216B.02, subdivision 12; 297A.68, subdivision 42.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

Minnesota Statutes 2025 Supplement, section 216B.02, subdivision 12, is

amended to read:

Subd. 12.

Qualified large-scale data center.

"Qualified large-scale data center"
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has the

meaning given in section
297A.68, subdivision 42
, paragraph (e).
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means a facility in

Minnesota:
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(1) that is comprised of one or more buildings connected to each other by fiber and

associated equipment that consist in the aggregate of at least 25,000 square feet, and that

are located in one physical location or multiple locations; and

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(2) for which the total cost of construction or refurbishment, investment in enterprise

information technology equipment, and computer software is at least $250,000,000

collectively by the facility and its tenants within a 60-month period beginning after June

30, 2025.

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EFFECTIVE DATE.

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This section is effective July 1, 2026.

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Sec. 2.

Minnesota Statutes 2024, section 216B.02, is amended by adding a subdivision to

read:

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Subd. 13.

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Enterprise information technology equipment.

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"Enterprise information

technology equipment" means computers and equipment supporting computing, networking,

or data storage, including servers and routers necessary for the maintenance and operation

of the qualified large-scale data centers.

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EFFECTIVE DATE.

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This section is effective July 1, 2026.

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Sec. 3.

Minnesota Statutes 2025 Supplement, section 297A.68, subdivision 42, is amended

to read:

Subd. 42.

Data centers.

(a) Purchases of enterprise information technology equipment

and computer software for use in a qualified data center
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, a qualified refurbished data center,

or a qualified large-scale data center
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are exempt, except that computer software maintenance

agreements are exempt for purchases made after June 30, 2013. The tax on purchases exempt

under this paragraph must be imposed and collected as if the rate under section
297A.62,

subdivision 1
, applied, and then refunded after June 30, 2013, in the manner provided in

section
297A.75
. This exemption includes enterprise information technology equipment

and computer software purchased to replace or upgrade enterprise information technology

equipment and computer software in a qualified data center
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, a qualified refurbished data

center, or a qualified large-scale data center
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.

(b) For purposes of this subdivision, "qualified data center" means a facility in Minnesota:

(1) that is comprised of one or more buildings that consist in the aggregate of
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at least
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fewer than
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25,000 square feet, and that are located on a single parcel or on contiguous

parcels
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, where the total cost of construction or refurbishment, investment in enterprise

information technology equipment, and computer software is at least $30,000,000 within

a 48-month period. The 48-month period begins no sooner than July 1, 2012, except that

costs for computer software maintenance agreements purchased before July 1, 2013, are

not included in determining if the $30,000,000 threshold has been met
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;

(2) that is constructed or substantially refurbished after June 30, 2012, where

"substantially refurbished" means that
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at least
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fewer than
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25,000 square feet have been

rebuilt or modified, including:

(i) installation of enterprise information technology equipment; environmental control,

computer software, and energy efficiency improvements; and

(ii) building improvements; and

(3) that is used to house enterprise information technology equipment, where the facility

has the following characteristics:

(i) uninterruptible power supplies, generator backup power, or both;

(ii) sophisticated fire suppression and prevention systems; and

(iii) enhanced security. A facility will be considered to have enhanced security if it has

restricted access to the facility to selected personnel; permanent security guards; video

camera surveillance; an electronic system requiring pass codes, keycards, or biometric scans,

such as hand scans and retinal or fingerprint recognition; or similar security features.

In determining whether the facility has the required square footage, the square footage

of the following spaces shall be included if the spaces support the operation of enterprise

information technology equipment: office space, meeting space, and mechanical and other

support facilities. For purposes of this subdivision, "computer software" includes, but is not

limited to, software utilized or loaded at a qualified data center,
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qualified refurbished data

center, or qualified large-scale data center,
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including maintenance, licensing, and software

customization.

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(c) For purposes of this subdivision, a "qualified refurbished data center" means an

existing facility that qualifies as a data center under paragraph (b), clauses (2) and (3), but

that is comprised of one or more buildings that consist in the aggregate of at least 25,000

square feet, and that are located on a single parcel or contiguous parcels, where the total

cost of construction or refurbishment, investment in enterprise information technology

equipment, and computer software is at least $50,000,000 within a 24-month period.

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(d)
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(c)
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For purposes of this subdivision, "enterprise information technology equipment"

means computers and equipment supporting computing, networking, or data storage,

including servers and routers. It includes, but is not limited to: cooling systems, cooling

towers, and other temperature control infrastructure; power infrastructure for transformation,

distribution, or management of electricity used for the maintenance and operation of a

qualified data center
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or qualified refurbished data center
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, including but not limited to exterior

dedicated business-owned substations, backup power generation systems, battery systems,

and related infrastructure; and racking systems, cabling, and trays, which are necessary for

the maintenance and operation of the qualified data center
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, qualified refurbished data center,

or qualified large-scale data center
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.

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(e) For purposes of this subdivision, "qualified large-scale data center" means a facility

in Minnesota:

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(1) that is comprised of one or more buildings connected to each other by fiber and

associated equipment that consist in the aggregate of at least 25,000 square feet, and that

are located in one physical location or multiple locations; and

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(2) for which the total cost of construction or refurbishment, investment in enterprise

information technology equipment, and computer software is at least $250,000,000

collectively by the facility and its tenants within a 60-month period beginning after June

30, 2025.

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(f)
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(d)
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A qualified data center
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, qualified large-scale data center, or qualified refurbished

data center
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may claim the exemptions in this subdivision for purchases made within 35

years of the date of its first purchase qualifying for the exemption under paragraph (a).

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(g)
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(e)
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The exemption in this subdivision is allowed for qualified data centers
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, qualified

large-scale data centers, and qualified refurbished data centers
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that were certified under

paragraph
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(h)
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(f)
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before July 1, 2042.

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(h)
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(f)
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The commissioner of employment and economic development must certify to the

commissioner of revenue, in a format approved by the commissioner of revenue, when a

qualified data center has met the requirements under paragraph (b)
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, a qualified refurbished

data center has met the requirements under paragraph (c), or a qualified large-scale data

center has met the requirements under paragraph (e)
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. The certification must provide the

following information regarding each qualified data center
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or qualified refurbished data

center
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:

(1) the total square footage amount;
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and
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(2) the total amount of construction or refurbishment costs and the total amount of

qualifying investments in enterprise information technology equipment and computer

software
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;
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.
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(3) the beginning and ending of the applicable period under paragraph (b), (c), or (e) in

which the qualifying expenditures and purchases under clause (2) were made, but in no case

shall the period begin before July 1, 2012; and

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(4) the date upon which the qualified data center first met the requirements under

paragraph (b), a qualified refurbished data center first met the requirements under paragraph

(c), or a qualified large-scale data center first met the requirements under paragraph (e).

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(i)
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(g)
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Any refund for sales tax paid on qualifying purchases under this subdivision must

not be issued unless the commissioner of revenue has received the certification required

under paragraph
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(h)
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(f)
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issued by the commissioner of employment and economic

development.

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(j)
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(h)
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The commissioner of employment and economic development must annually

notify the commissioner of revenue of the qualified data centers that are projected to meet

the requirements under paragraph (b)
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, the qualified refurbished data centers that are projected

to meet the requirements under paragraph (c), and the qualified large-scale data centers that

are projected to meet the requirements under paragraph (e),
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in each of the next four years.

The notification must provide the information required under paragraph
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(h), clauses (1) to

(4), for each qualified data center, qualified refurbished data center, or qualified large-scale

data center
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(f)
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.

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(k)
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(i)
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Laborers and mechanics performing work to construct or refurbish qualified
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large-scale
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data centers must be paid the prevailing wage rate for the work as defined in

section
177.42
, subdivision 6. Work performed to construct or refurbish qualified
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large-scale
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data centers is subject to the requirements and enforcement provisions of sections
177.27
,

177.30
,
177.32
, and
177.41
to
177.45
. For purposes of this paragraph, "refurbish" does not

include maintenance or equipment refreshment or replacement. The commissioner of

employment and economic development must not certify a qualified
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large-scale
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data center

under paragraph
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(h)
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(f)
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unless the entity seeking an exemption certifies to the commissioner

of employment and economic development that it has complied with this paragraph for all

covered work after June 30,
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2025
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2026
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.

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(l)
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(j)
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Within three years after being placed in service, a qualified
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large-scale
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data center

must certify to the commissioner of commerce that the facility has attained certification

under one or more of the following sustainable design or green building standards:

(1) BREEAM for new construction or BREEAM in-use;

(2) Energy Star;

(3) Envision;

(4) ISO 50001-energy management;

(5) LEED for building design and construction or LEED for operations and maintenance;

(6) green globes for new construction or green globes for existing buildings;

(7) UL 3223; or

(8) other reasonable standards approved by the commissioner of employment and

economic development.

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(m)
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(k)
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Notwithstanding section
289A.38, subdivision 1
, the amount of the exemption

allowed to a qualified
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large-scale
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data center must be repaid to the commissioner of revenue

if the commissioner of commerce determines that
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a
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the
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qualified
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large-scale
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data center has

not met the requirements under paragraph
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(l)
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(j)
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. Nothing in this paragraph prohibits the

commissioner of revenue from making an assessment of tax, interest, or penalties if the

commissioner of revenue determines that sales to and purchases made by a qualified
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large-scale
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data center do not qualify for the exemption under this subdivision.

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EFFECTIVE DATE.

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This section is effective for sales and purchases made after June

30, 2026.

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