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26.990.21 101st Legislative Session 234
2026 South Dakota Legislature
Senate Bill 234
Introduced by: Senator Crabtree
Underscores indicate new language.
Overstrikes indicate deleted language.
An Act to modify provisions pertaining to the purchasing of goods and services 1
related to data center operations. 2
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF SOUTH DAKOTA: 3
Section 1. That a NEW SECTION be added to chapter 10-45: 4
The terms used in this Act mean: 5
(1) "Computer software," programs and other operating information used solely for 6
the maintenance and operation of a qualified data center; 7
(2) "Data center," a centralized repository for the storage, management, 8
dissemination, and processing of electronic data and information, except for that 9
which relates to the mining of digital currency; 10
(3) "Enterprise information technology equipment," the following products used solely 11
for the maintenance and operation of a qualified data center: 12
(a) Computer hardware, servers, storage arrays, backup systems, disaster 13
recovery equipment, routers, cooling systems, temperature control 14
infrastructure, network equipment, switches, load balancers, firewalls, 15
network cabling, edge devices, network monitoring equipment, water 16
treatment systems, chilled water equipment, economizers, cooling towers, 17
and piping and pump equipment for cooling towers; 18
(b) Power infrastructure for the management of electricity, dedicated 19
distribution equipment, backup power generation systems, battery 20
systems, and construction materials for structures unique to data centers 21
or other related infrastructure excluding primary electric generation service, 22
transmission, or utility distribution infrastructure; 23
(c) Racking systems, raised flooring, cabling, or trays necessary for the 24
maintenance and operation of a qualified data center; 25
26.990.21 2 234
Underscores indicate new language.
Overstrikes indicate deleted language.
(d) Security systems, physical access control systems, surveillance systems, 1
biometric scanners, security monitoring equipment, and monitoring 2
systems, environmental monitoring systems, infrastructure management 3
tools, and building management systems; 4
(e) Testing and diagnostic equipment used for maintenance, commissioning, or 5
troubleshooting; 6
(f) Telecommunications and fiber infrastructure, fiber optic cabling, satellite 7
equipment, and internet exchange components; and 8
(g) Air quality systems, and specialized HVAC, filtration, and humidity control 9
equipment; 10
(4) "Qualified business," the owner, operator, or tenant of a qualified data center or a 11
proposed data center; and 12
(5) "Qualified data center," a facility located in this state: 13
(a) Comprised of one or more buildings containing a data center; 14
(b) Where all buildings that contain a data center qualify as real property 15
subject to taxation pursuant to §§ 10-4-1 and 10-4-2; and 16
(c) Equipped with fire suppression and prevention systems. 17
Section 2. That a NEW SECTION be added to chapter 10-45: 18
There are specifically exempted from the provisions of this chapter and from the 19
computation of tax imposed by it, gross receipts from the sale of enterprise information 20
technology equipment or computer software to be used in a qualified data center. 21
Section 3. That a NEW SECTION be added to chapter 10-45: 22
To be eligible for the exemption provided in section 2 of this Act, a qualified 23
business in a qualified data center, or a qualified business in a proposed qualified data 24
center, shall submit any documentary evidence required by the Department of Revenue 25
to verify the eligibility of the qualified data center or proposed data center. The 26
documentary evidence required by this section is confidential. The secretary of the 27
Department of Revenue shall determine if the qualified business is eligible. 28
To be eligible for the exemption provided by section 2 of this Act, a qualified 29
business shall: 30
(1) Ensure electric service provided to the qualified business by an electric utility is 31
under a written agreement or rate schedule that avoids the shifting of costs to 32
other customers of the electric utility; and 33
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Underscores indicate new language.
Overstrikes indicate deleted language.
(2) Provide notice to local water providers to ensure that water consumption is 1
compatible for the location in which the qualified data center is situated. 2
Upon determining the eligibility of a future qualified business in a proposed 3
qualified data center, the secretary shall provide the business with an exemption 4
certificate for taxes imposed pursuant to this chapter and chapter 10-46. 5
To retain eligibility for the exemption provided in section 2 of this Act, a qualified 6
business must file an affidavit with the secretary attesting that the data center or the 7
future data center qualifies for the exemption, prior to June first of each year. 8
Section 4. That a NEW SECTION be added to chapter 10-46: 9
There are specifically exempted from the provisions of this chapter, gross receipts 10
from the sale of enterprise information technology equipment or computer software to be 11
used in a qualified data center. 12