Overview
Idaho enacted a data-center-specific sales tax exemption in 2020 targeting very large facilities. Projects investing at least $250 million within five years and creating 30 new jobs can buy server equipment and construction materials tax-free. Pending legislation (HB 315) would add a seven-year sunset for projects approved after March 2025, requiring them to start paying sales tax again once the exemption expires.
Incentives
Idaho Information Technology Equipment Sales Tax Exemption
Idaho’s primary data center incentive exempts qualifying projects from sales and use taxes on server equipment and new facility construction, effective July 1, 2020.[1][2]
Eligible equipment includes:
- Servers, rack servers, chillers, storage devices, generators, and cabling
- Enabling software integral to eligible equipment[2]
Qualification thresholds:
- $250 million capital investment within five years after construction begins
- 30 new jobs within two years after operations begin
- Average weekly wage at or above the county average (per BLS data)[1][2]
Key conditions:
- Provisional exemption with clawback — if the company misses investment or job targets, it must repay all exempted sales and use tax[2]
- Cannot be used on property already receiving Idaho Tax Reimbursement Incentive (ITRI) benefits[1][2]
Contractor Sales Tax Exemption Certificate
Contractors building a certified data center can purchase building materials, equipment, and fixtures that become part of the facility without paying sales tax. Tools and other items that do not become permanent parts of the facility remain taxable.[3]
Idaho Tax Reimbursement Incentive (ITRI)
ITRI is a general economic development incentive that offers tax credits of up to 30% of income, payroll, and sales taxes for up to 15 years. Eligibility requires 20 new jobs in rural areas or 50 new jobs in urban areas, jobs must meet county wage averages, and applicants must demonstrate community contribution and economic impact.[4]
Data centers using the sales tax exemption cannot use ITRI for the same property.[1][2]
Requirements and Conditions
High Investment and Job Thresholds
The sales tax exemption is limited to very large facilities. Projects must invest at least $250 million and create 30 new jobs paying county-average wages or higher.[2]
Clawback Provisions
If a company fails to meet the five-year investment or two-year job creation deadlines, it must repay all sales and use tax that was exempted during the provisional period.[2]
Contractor Exemption Limits
The contractor sales tax exemption applies only to materials that become permanent parts of the data center facility. Tools, temporary equipment, and other non-incorporated items remain taxable.[3]
What to Watch
- HB 315 final status: The 2025 bill passed the House (60–8–2) and was reported out of Senate committee to the 14th Order for amendment on March 26, 2025. As of January 2026, no final enactment is confirmed.[6] If enacted, projects approved on or after March 1, 2025, would face a seven-year sunset on the exemption, after which they must begin remitting sales tax to the Idaho tax relief fund.[5]
- Local zoning activity: Monitor Ada County and other jurisdictions for new zoning limits or moratoria on data center development.
- Utility tariffs: Review Idaho Power and Rocky Mountain Power filings for any new large-load rate classes or interconnection requirements specific to data centers.
Sources
[1] Idaho Department of Commerce, “Data Center Sales Tax Exemption,” n.d., https://commerce.idaho.gov/incentives-and-financing/incentives/data-center-sales-tax-exemption/ (accessed January 2026).
[2] Idaho Legislature, “H0521 (2020) — Idaho Information Technology Equipment Sales Tax Exemption” (bill text; adds Idaho Code 63-3622VV), 2020, https://legislature.idaho.gov/wp-content/uploads/sessioninfo/2020/legislation/H0521.pdf (accessed January 2026).
[3] Idaho State Tax Commission, “Form ST-103C: Sales Tax Exemption Certificate (Real Property Contractors),” March 11, 2025, https://tax.idaho.gov/wp-content/uploads/forms/EFO00332/EFO00332_03-11-2025.pdf (accessed January 2026).
[4] Idaho Department of Commerce, “Idaho Tax Reimbursement Incentive,” n.d., https://commerce.idaho.gov/incentives-and-financing/incentives/idaho-tax-reimbursement-incentive/ (accessed January 2026).
[5] Idaho Legislature, “H0315 (2025), As Amended — Revises Idaho Information Technology Equipment Sales Tax Exemption” (bill text), 2025, https://legislature.idaho.gov/wp-content/uploads/sessioninfo/2025/legislation/H0315E1.pdf (accessed January 2026).
[6] Idaho Legislature, “House Bill 315 (H0315) — Bill Actions,” 2025, https://legislature.idaho.gov/sessioninfo/2025/legislation/H0315/ (accessed January 2026).