Now available: This Is Server CountryGet the book→
MA — State Policy Updated January 2026

Massachusetts

Sales and Use Tax Exemption (20 years) Certification thresholds (size, investment, jobs) Water withdrawal permits Air quality approvals for backup generators Local zoning control Water Constraints

Overview

Massachusetts enacted a 20-year sales and use tax exemption for certified “qualified data centers” in November 2024, exempting equipment, software, electricity, and construction costs. The program requires state certification and sets minimum thresholds: 100,000 square feet, $50 million investment within 10 years, and 100 jobs maintained in Massachusetts. Data centers must also navigate state environmental permitting (water withdrawals, air quality for backup generators) and municipal zoning processes.

Incentives

Sales and Use Tax Exemption (M.G.L. c. 64H Sec. 6(zz))

This program exempts qualified data centers from sales and use taxes on equipment, software, electricity, and construction costs for a 20-year qualification period.[1]

  • Minimum size: 100,000 square feet
  • Minimum investment: $50 million within 10 years of certification
  • Minimum employment: 100 jobs maintained in Massachusetts
  • The exemption persists for a subsequent owner if the facility is sold
  • Certification can be revoked for material noncompliance with thresholds
  • Effective November 20, 2024 for costs incurred after that date

EOED Certification Process

The Executive Office of Economic Development (EOED) must certify facilities before they can claim the exemption.[2] EOED published a draft regulation (400 CMR 9.00) defining terms, certification procedures, and reporting requirements.[3] As of January 2026, applications are not being accepted until EOED releases a standardized application form.[2]

Requirements and Conditions

Certification Thresholds

To qualify for the exemption, a project must meet the minimum size, investment, and job thresholds listed above. Certification can be revoked if the facility does not substantially achieve these levels.[1]

Water and Environmental Rules

Water Withdrawal Permits

The Water Management Act requires a permit for withdrawals above 100,000 gallons per day (annual average) or 9 million gallons in a three-month period.[6] Data centers using large-scale evaporative cooling can trigger these thresholds. MassDEP also requires MEPA (Massachusetts Environmental Policy Act) review for new withdrawals above 100,000 gpd.[6]

Air Quality Approvals for Backup Generators

MassDEP requires an air quality plan approval before beginning construction on projects that add a new emissions source.[7] Stationary diesel backup generators — standard equipment for data centers — typically require compliance certifications or plan approvals under this framework.

Building Energy Code

Massachusetts updates its building energy code on a three-year cycle aligned to the International Energy Conservation Code (IECC).[8] Municipalities can adopt the Stretch Code or the Specialized Code, which impose tighter energy performance requirements beyond the base code.

Local Zoning

Massachusetts delegates zoning authority to municipalities under Chapter 40A, with zoning decisions made at the local level.[9] Data center developers must navigate local zoning, special permit, and site plan review processes that vary by community.

What to Watch

  • Finalization of EOED regulations (400 CMR 9.00): The draft certification regulation was open for public comment in August 2025. Watch for the final rule and the release of the standardized application form.[3][4]
  • Westfield hyperscale campus: State House News Service reported in August 2025 that the tax exemption was described as critical for a proposed “hyperscale” data center campus in Westfield to move forward.[5] Environmental and ratepayer advocacy groups have raised concerns about the exemption’s impact on electricity rates and water resources.

Sources

[1] Commonwealth of Massachusetts, General Laws. “Part I, Title IX, Chapter 64H, Section 6 (Sales and Use Tax Exemptions).” Subsection (zz) added by 2024, c. 238, Sec. 214. https://malegislature.gov/Laws/GeneralLaws/PartI/TitleIX/Chapter64H/Section6 (accessed 2026-01-08).

[2] Executive Office of Economic Development. “Notice Regarding Qualified Data Center Tax Exemption.” https://www.mass.gov/info-details/notice-regarding-qualified-data-center-tax-exemption (accessed 2026-01-08).

[3] Executive Office of Economic Development. “400 CMR 9.00 Qualified Data Centers (Draft Regulation).” https://www.mass.gov/info-details/400-cmr-900-qualified-data-centers (accessed 2026-01-08).

[4] Executive Office of Economic Development. “Public Hearing and Comment Period for Proposed New Regulation on Qualified Data Centers.” August 21, 2025. https://www.mass.gov/event/public-hearing-and-comment-period-for-proposed-new-regulation-on-qualified-data-centers-08-21-2025 (accessed 2026-01-08).

[5] Alison Kuznitz. “Tax change lifts plans for ‘hyperscale’ data center campus in Westfield.” CommonWealth Beacon (State House News Service), August 21, 2025. https://commonwealthbeacon.org/economy/tax-change-lifts-plans-for-hyperscale-data-center-campus-in-westfield/ (accessed 2026-01-08).

[6] Massachusetts Department of Environmental Protection. “Fact Sheet: Water Management Act - Registration and Permitting.” https://www.mass.gov/info-details/fact-sheet-water-management-act-registration-and-permitting (accessed 2026-01-08).

[7] Massachusetts Department of Environmental Protection. “MassDEP Air Plan Applications.” https://www.mass.gov/guides/massdep-air-plan-applications (accessed 2026-01-08).

[8] Massachusetts Department of Energy Resources. “Building Energy Code.” https://www.mass.gov/info-details/building-energy-code (accessed 2026-01-08).

[9] Executive Office of Housing and Livable Communities. “The zoning framework in Massachusetts.” https://www.mass.gov/info-details/the-zoning-framework-in-massachusetts (accessed 2026-01-08).