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WA — State Policy Updated January 2026

Washington

Statewide incentives and compliance conditions, plus environmental and water permitting that affect data center siting.

Sales and Use Tax Exemption (Rural Counties) Sales and Use Tax Exemption (King County) Family-Wage Employment Requirements Annual Tax Performance Reporting Water Constraints

Overview

Washington operates two parallel sales and use tax exemption programs for data centers — one for rural counties and one for King County (population over 800,000). Both programs require job creation at 125% of county per-capita income, annual reporting, and compliance with state environmental review and water permitting. The rural program issues new certificates through 2036; the King County program ends new certificates in 2028.

Incentives

Sales and Use Tax Exemption (Rural Counties)

Washington exempts eligible server equipment and power infrastructure from retail sales and use tax for qualifying data centers in rural counties.[1][2]

  • Eligible facilities must have at least 20,000 square feet dedicated to working servers
  • Construction must commence within timing windows that run through June 30, 2035
  • New exemption certificates stop July 1, 2036; the exemption sunsets July 1, 2048
  • The Department of Revenue can issue no more than six refurbishment certificates per year on a first-come, first-served basis

Sales and Use Tax Exemption (King County)

A separate exemption covers eligible server equipment and power infrastructure in counties with populations over 800,000 (currently King County only).[3]

  • Facilities must have at least 20,000 square feet dedicated to working servers
  • Modular or containerized units do not qualify
  • New exemption certificates end July 1, 2028
  • The exemption expires July 1, 2038

Requirements and Conditions

Family-Wage Employment Requirements

Both programs require data centers to create and maintain high-wage jobs to keep the tax exemption.

Rural County Program:[1]

  • Within six years of certificate issuance, increase net employment by at least 35 family-wage positions, or three positions per 20,000 square feet of new server space, whichever is less
  • Family-wage positions must pay at least 125% of county per-capita personal income (for certificates issued on or after June 9, 2022)
  • Repayment of taxes is required if employment requirements are not met, with proportional repayment tied to the duration of noncompliance
  • The Department of Revenue may allow exceptions for economic downturns or natural disasters

King County Program:[3]

  • Within six years, increase net employment by three family-wage positions per 20,000 square feet of newly dedicated server space
  • Family-wage positions must pay at least 125% of county per-capita personal income (for certificates issued on or after June 9, 2022)
  • Must maintain those positions while the certificate is valid

Annual Tax Performance Reporting

Qualifying businesses and tenants must file annual tax performance reports with the Department of Revenue.[1] Reports must include construction firm names and employment levels tied to data center construction or refurbishment.

Water and Environmental Rules

Washington requires environmental review under the State Environmental Policy Act (SEPA) for projects that may have significant impacts.[4][5] Data centers using water for cooling or process needs must obtain water-right permits from the Department of Ecology, which administers applications through the Water Right Application Portal.[6]

What to Watch

  • Washington now runs two data-center tax exemption regimes with different sunset dates (2028 for King County, 2036 for rural counties), signaling ongoing legislative oversight of where large facilities locate and the job outcomes they deliver
  • The six refurbishment certificates per year cap for rural counties creates scarcity and first-mover advantage for existing facility upgrades

Sources

[1] Washington State Legislature, “RCW 82.08.986: Exemptions—Eligible server equipment—Eligible power infrastructure—Computer data centers,” Revised Code of Washington, n.d., http://app.leg.wa.gov/rcw/default.aspx?cite=82.08.986 (accessed 2026-01-08).

[2] Washington State Legislature, “RCW 82.12.986: Exemptions—Eligible server equipment—Eligible power infrastructure—Computer data centers,” Revised Code of Washington, n.d., http://app.leg.wa.gov/rcw/default.aspx?cite=82.12.986 (accessed 2026-01-08).

[3] Washington State Legislature, “RCW 82.08.9861: Exemptions—Eligible server equipment—Eligible power infrastructure in counties with populations over 800,000,” Revised Code of Washington, n.d., http://app.leg.wa.gov/rcw/default.aspx?cite=82.08.9861 (accessed 2026-01-08).

[4] Washington State Legislature, “Chapter 43.21C RCW: State Environmental Policy,” Revised Code of Washington, n.d., http://app.leg.wa.gov/rcw/default.aspx?cite=43.21C (accessed 2026-01-08).

[5] Washington State Legislature, “Chapter 197-11 WAC: State Environmental Policy Act Rules,” Washington Administrative Code, n.d., http://app.leg.wa.gov/wac/default.aspx?cite=197-11 (accessed 2026-01-08).

[6] Washington State Department of Ecology, “Water right permits,” n.d., https://ecology.wa.gov/regulations-permits/permits-certifications/water-right-permits (accessed 2026-01-08).