Overview
North Dakota offers a single statewide incentive for data center development: a sales and use tax exemption for enterprise IT equipment and software used in certified facilities. The program requires modest size and security thresholds and annual reporting, but no minimum investment or job creation targets.
Incentives
Sales and Use Tax Exemption for Qualified Data Centers
This exemption eliminates state sales and use tax on enterprise IT equipment and software purchased for use in a qualified data center.[1]
- Eligible equipment includes servers, routers, cooling systems, temperature control and power infrastructure, backup generation, battery systems, and racking/cabling.
- Computer software used or loaded at the facility qualifies, including maintenance, licensing, and customization services.
- The exemption covers replacement and upgraded equipment within the qualified data center.
- Qualified businesses receive a certificate from the Tax Commissioner to claim the exemption at purchase, or may apply for a refund after the fact.[1]
Requirements and Conditions
To qualify for the sales tax exemption, data center owners must meet facility and reporting requirements.
Facility Standards
A qualified data center must meet size, use, and security thresholds:[1]
- At least 15,000 square feet of space, with at least 50% dedicated to data processing.
- Located on a single or contiguous parcel.
- Newly constructed or substantially refurbished after December 31, 2020.
- Equipped with sophisticated fire suppression and enhanced security features.
Certification and Reporting
Data center owners must obtain state certification and file annual reports on the program’s use:[1]
- The future owner must apply for certification as a qualified data center with the Tax Commissioner.
- Certified owners must file annual reports by January 31 covering exemption amounts, jobs created or retained, and any local incentives received.
- The Tax Commissioner must disclose annual report data to legislative leadership upon written request.
- Owners must respond to Tax Commissioner information requests within 30 days.
- Operators or tenants must obtain documentation from the data center owner and submit it with exemption applications.
What to Watch
- Six-year statutory review: The Legislative Council completed a review of the data center exemption in September 2025, examining its origin in 2015, sunset in 2020, and re-enactment in 2021 with modified eligibility and reporting requirements.[2]
- Digital asset mining protections: HB 1239 (2025) proposed statewide limits on local zoning and noise restrictions for digital asset mining facilities drawing more than 1 MW, but failed in the House on February 17, 2025.[3][4][5]
Sources
[1] North Dakota Legislative Branch, “North Dakota Century Code Title 57, Chapter 57-39.2 (Sales Tax), Section 57-39.2-04.17,” July 1, 2025, https://ndlegis.gov/cencode/t57c39-2.pdf (accessed 2026-01-08).
[2] North Dakota Legislative Council, “Economic Development Tax Incentive Study - Qualified Data Center Sales Tax Exemption,” September 2025, https://ndlegis.gov/sites/default/files/resource/committee-memorandum/27.9096.01000.pdf (accessed 2026-01-08).
[3] North Dakota Legislative Assembly, “House Bill No. 1239 (25.0518.01000): Blockchain technology and protection for digital asset mining,” 2025, https://ndlegis.gov/assembly/69-2025/regular/documents/25-0518-01000.pdf (accessed 2026-01-08).
[4] North Dakota Legislative Branch, “HB 1239 - Overview,” 69th Legislative Assembly (2025), https://ndlegis.gov/assembly/69-2025/regular/bill-overview/bo1239.html (accessed 2026-01-08).
[5] North Dakota Legislative Branch, “HB 1239 - Actions,” 69th Legislative Assembly (2025), https://ndlegis.gov/assembly/69-2025/regular/bill-actions/ba1239.html?bill_year=2025&bill_number=1239 (accessed 2026-01-08).