Overview
Pennsylvania offers data centers a generous 25-year sales and use tax exemption for equipment, but only if they meet investment and job thresholds that scale with county population. The state Public Utility Commission has proposed a model tariff framework for large loads (including hyperscale data centers) that would require financial security, load-ramp schedules, and other protections to prevent grid costs from landing on existing ratepayers.
Incentives
Sales and Use Tax Exemption for Computer Data Center Equipment
Pennsylvania’s Department of Revenue certifies data centers for a sales and use tax exemption on qualifying equipment under Act 84 (2016), amended by Act 13 (2019) and Act 25 (2021).[1][2] Certified facilities receive exemption certificates valid for 25 full calendar years after the certification application year.
The exemption covers equipment purchased or leased for use at the certified facility, including:
- Power transformation, distribution, and backup equipment
- Cooling and environmental control systems
- Servers, storage arrays, and networking gear
- Monitoring, security, and fire suppression systems[2]
Requirements and Conditions
Investment and Job Thresholds
To maintain certification, data centers must hit investment and job targets by the 4th anniversary of certification. Thresholds scale by county population:
- Counties with ≤250,000 population: $75 million new investment and 25 new full-time jobs
- Counties with >250,000 population: $100 million new investment and 45 new full-time jobs[2]
After the 4th anniversary, the facility must maintain $1 million in annual compensation at the certified site each year.[2]
What Doesn’t Count
The program has several important limits. The exemption does not apply to local sales taxes (1% in Allegheny County, 2% in Philadelphia).[3] It does not cover labor, maintenance contracts, offsite storage, tools, or non-equipment purchases. Remote workers and FTE positions outside the certified facility do not count toward job or compensation requirements.[3] Each data center location must be certified separately — there is no statewide blanket exemption.[3]
Revocation and Recapture
If a certified facility fails to meet or maintain eligibility requirements, the Department of Revenue may revoke certification and recapture all tax benefits.[2][3]
Utility and Grid Rules
PUC Tentative Order on Large-Load Tariff
On November 6, 2025, the Pennsylvania Public Utility Commission issued a Tentative Order proposing a statewide model tariff for large-load customers, explicitly including hyperscale data centers.[4][5] The proposal defines Large Load Customers as those using 50 MW individually or 100 MW in the aggregate, aligning with approaches used elsewhere in the PJM interconnection region.[5]
The model tariff framework centers on cost causation and ratepayer protection. Proposed requirements include:
- Interconnection study timelines and cost transparency
- Deposits, financial security, or collateral to cover infrastructure costs
- Minimum contract terms and load-ramp schedules showing when demand will materialize
- Exit or early termination fees if the customer abandons the project
- Options for large customers to self-fund infrastructure upgrades instead of socializing costs[5]
The Tentative Order triggered a 30-day public comment period after publication in the Pennsylvania Bulletin. A final order is pending.[4][5]
What to Watch
- Final PUC order and utility-specific tariff filings implementing or modifying the model large-load tariff framework (Docket No. M-2025-3054271).
- Public debate over the fiscal impact of the sales tax exemption and the grid reliability risks posed by major hyperscale projects, particularly Amazon’s Pennsylvania plans.[6]
- Any local zoning moratoria or county-level policy changes tied to hyperscale data center siting.
Sources
[1] Pennsylvania Department of Revenue, “Computer Data Center Equipment Program,” Commonwealth of Pennsylvania, https://www.pa.gov/agencies/revenue/incentives-credits-and-programs/computer-data-center-equipment-program.html (accessed January 8, 2026).
[2] Pennsylvania Department of Revenue, “Computer Data Center Equipment Exemption Program Guidelines,” September 2025, https://www.pa.gov/content/dam/copapwp-pagov/en/revenue/documents/incentivescreditsprograms/computerdatacenterequipprog/documents/computer_data_center_equip_exemption_program_guidelines.pdf (accessed January 8, 2026).
[3] Pennsylvania Department of Revenue, “Computer Data Center Equipment Exemption Program FAQ,” last updated December 17, 2024, https://www.pa.gov/content/dam/copapwp-pagov/en/revenue/documents/incentivescreditsprograms/computerdatacenterequipprog/documents/computer_data_center_equip_exemption_program_faq.pdf (accessed January 8, 2026).
[4] Pennsylvania Public Utility Commission, “PUC Advances Plan to Balance Data Center Growth and Consumer Protection,” press release, November 6, 2025, https://www.puc.pa.gov/press-release/2025/puc-advances-plan-to-balance-data-center-growth-and-consumer-protection-11062025 (accessed January 8, 2026).
[5] Pennsylvania Public Utility Commission, “Tentative Order,” Docket No. M-2025-3054271, November 6, 2025, https://www.puc.pa.gov/pcdocs/1901687.pdf (accessed January 8, 2026).
[6] Spotlight PA, “Amazon data centers could cost PA millions in tax revenue,” June 30, 2025, https://www.spotlightpa.org/news/2025/06/amazon-data-centers-pennsylvania-tax-break-energy-grid/ (accessed January 8, 2026).