Overview
Indiana offers one of the nation’s longest data center sales tax exemptions — up to 50 years for projects investing more than $750 million — covering both equipment purchases and energy costs.[1] Local governments can add personal property tax abatements for data centers investing at least $25 million, though these are discretionary.[1][3] The state has approved $168 million in multi-decade incentives for four large data center projects since mid-2025, but at least one county has paused new permits while it updates zoning rules.[2][4]
Incentives
Data Center Sales and Use Tax Exemption
The Indiana Economic Development Corporation (IEDC) administers a sales and use tax exemption on equipment and energy purchases for qualified data centers.[1] The exemption duration scales with investment size.
- 25-year exemption for projects investing less than $750 million
- 50-year exemption for projects investing $750 million or more
- Covers qualifying data center equipment and energy purchases
- Codified under Indiana Code 6-2.5-15
Local Personal Property Tax Exemption
Local governments may exempt qualified enterprise information technology equipment from personal property tax for data centers meeting minimum investment thresholds.[1][3]
- Requires at least $25 million in combined real and personal property investment
- Entirely discretionary — each county or municipality decides whether to grant the abatement
- Applies only to IT equipment, not real estate or other property
Recent IEDC Incentive Approvals
In June 2025, the IEDC approved $168 million in tax incentives for four large data center projects located around Indianapolis and in LaPorte County.[4]
- Incentive totals projected over multiple decades
- Beneficiary companies not publicly disclosed at time of approval
- Projects located in central Indiana and northwest Indiana (LaPorte County)
Requirements and Conditions
Starke County Hyperscale Data Center Moratorium
Starke County has drafted a temporary moratorium on improvement location permits for hyperscale data center projects in unincorporated areas.[2] The county is using the pause to amend its zoning ordinances.
- Moratorium limited to one year maximum
- Defines “hyperscale data project” as a building over 5,000 square feet primarily designed to house data center equipment or software
- Applies only to unincorporated areas of the county
What to Watch
- Fiscal impact scrutiny: State reporting estimates that sales and use tax exemptions for large data centers could reduce state revenue by billions of dollars over the life of multi-decade incentives, prompting questions from local communities and legislators about the net fiscal benefit.[3]
- Local zoning responses: Starke County’s moratorium may signal growing interest among rural counties in establishing clearer zoning and permit rules before hyperscale projects arrive.
- Undisclosed beneficiaries: The IEDC has approved large incentive packages without disclosing recipient companies, raising transparency questions that could lead to new disclosure requirements.
Sources
[1] Indiana Economic Development Corporation, “Data Center Sales Tax Exemption (Overview),” n.d., https://www.iedc.in.gov/indiana-advantages/investments/data-center-sales-tax-exemption/overview (accessed January 8, 2026).
[2] Starke County, Indiana, “Draft Ordinance: Temporary Moratorium on the Issuance of Improvement of Location Permits for Hyperscale Data Center Projects (Ordinance No. 2025-______),” draft dated November 12, 2025, https://starke.in.gov/wp-content/uploads/2025/11/Draft-Ordinance-Data-Center-11.12.25.pdf (accessed January 8, 2026).
[3] WISH-TV, “Data center tax breaks could leave Indiana $2.2 billion short,” June 11, 2025, https://www.wishtv.com/news/indiana-news/indiana-data-center-tax-laws/ (accessed January 8, 2026).
[4] InkFreeNews, “IEDC Board Okays $168M Incentives For Four Data Centers,” June 27, 2025, https://www.inkfreenews.com/2025/06/27/iedc-board-okays-168m-incentives-for-four-data-centers/ (accessed January 8, 2026).