Overview
Wisconsin offers qualifying data centers a broad sales and use tax exemption on construction materials, equipment, and electricity through the state’s economic development agency (WEDC). The program has no cap on total exemptions but requires minimum capital investments ranging from $50 million to $150 million depending on county population. Local approval remains the primary gatekeeper, with no statewide siting framework and growing debate over whether the tax benefits justify the public cost.
Incentives
Sales and Use Tax Exemption (2023 Act 19)
Wisconsin exempts sales and use tax on data center construction materials, server equipment, power and cooling systems, and electricity for WEDC-certified qualified data centers.[1][2]
- Minimum investment thresholds (to be met within five years of certification): $150 million in counties with over 100,000 residents, $100 million in counties with 50,001–100,000 residents, or $50 million in counties with 50,000 or fewer residents.[2]
- The exemption applies only to purchases made after the WEDC certification date; prior purchases do not qualify.[1][2]
- No dollar cap on total exempt purchases once a project is certified.[2]
- If the certified data center fails to meet the minimum investment within five years, WEDC revokes certification and recoups a share of the foregone sales tax based on local tax rates.[2]
Proposed TID Cap Waiver (AB228)
AB228 (introduced in 2025) would exempt data-center-only tax increment financing districts from Wisconsin’s 12% equalized value cap when all TID project costs are tied to the qualified data center.[3]
Requirements and Conditions
WEDC Certification and Investment Recapture
All tax exemptions are contingent on WEDC certification, which requires meeting the applicable minimum investment threshold within five years. If a project falls short, WEDC revokes certification and recaptures a portion of the investment tied to foregone sales tax revenue.[2]
Proposed Cryptocurrency Mining Exclusion (AB245)
AB245 (introduced in 2025) proposes to exclude cryptocurrency mining facilities from the data center tax exemption and updates the definition to explicitly cover colocation facilities that provide space, utilities, and managed services for individual or networked servers.[4]
Water and Environmental Rules
High Capacity Well Approval
Data centers planning water-cooled infrastructure must obtain prior approval from the Wisconsin Department of Natural Resources (DNR) to construct or operate a high capacity well system — defined as any well (or combination of wells on a property) capable of withdrawing more than 100,000 gallons per day.[5]
Water Withdrawal Registration
Facilities with the capacity to withdraw 100,000 gallons per day (approximately 70 gallons per minute) must register with the DNR, with limited exemptions.[6]
Local Zoning
Wisconsin has no statewide siting law specific to data centers. Approvals are handled through local zoning and conditional use permits, as seen in pending rezoning applications for large projects like QTS in DeForest (Dane County).[7] Local policy debate includes moratorium proposals, such as Madison’s December 2025 proposal to pause new data center construction while the city develops standards.[8]
What to Watch
- AB245 and AB228: Track whether either bill advances in the 2025 legislative session. AB245 would exclude cryptocurrency mining; AB228 would ease local TID financing constraints.
- Madison moratorium: Monitor whether Madison enacts its proposed pause on data center construction and what standards emerge from the review process.
- WEDC certification activity: Check WEDC’s list of certified qualified data centers and whether any certifications have been revoked due to unmet investment thresholds.
Sources
[1] Wisconsin Department of Revenue, “Sales and Use Tax Exemption for Qualified Data Centers (Fact Sheet 2114),” July 26, 2024, https://www.revenue.wi.gov/DOR%20Publications/2114QualifiedDataCenter.pdf (accessed January 8, 2026).
[2] Wisconsin Economic Development Corporation, “Data Center Sales and Use Tax Exemption (DCSTE) Program Guidelines for Calendar Year 2025,” December 5, 2024, https://wedcazurecdn.blob.core.windows.net/public/OnlineDirectoryProgramGuidelines/BCD_DCSTE_CY25_PG_Final%20Clean_Signed.pdf (accessed January 8, 2026).
[3] Wisconsin Legislature, “AB228: Bill Text (Tax Increment Districts Containing Qualified Data Centers),” April 29, 2025, https://docs.legis.wisconsin.gov/2025/related/proposals/ab228 (accessed January 8, 2026).
[4] Wisconsin Legislature, “AB245: Bill Text (Modifying the Sales and Use Tax Exemption for Qualified Data Centers),” May 2, 2025, https://docs.legis.wisconsin.gov/2025/related/proposals/ab245 (accessed January 8, 2026).
[5] Wisconsin Department of Natural Resources, “High Capacity Wells,” https://dnr.wisconsin.gov/topic/Wells/HighCap (accessed January 8, 2026).
[6] Wisconsin Department of Natural Resources, “Water Use Registration,” https://dnr.wisconsin.gov/topic/WaterUse/Registration.html (accessed January 8, 2026).
[7] Journal Sentinel, “Are there laws regulating data centers in Wisconsin? What to know,” November 13, 2025, https://www.jsonline.com/story/news/local/2025/11/13/are-there-laws-regulating-data-centers-in-wisconsin-what-to-know/87196808007/ (accessed January 8, 2026).
[8] IB Madison, “Madison mayor to propose moratorium on data center construction,” December 9, 2025, https://www.ibmadison.com/business-report/madison-mayor-to-propose-moratorium-on-data-center-construction/article_ea336687-8cf4-4a58-bb5d-743f380854ac.html (accessed January 8, 2026).
[9] Joe Schulz, “Local leaders see data centers as revenue boon, but critics say subsidy programs undermine those efforts,” Wisconsin Public Radio, May 14, 2025 (updated May 16, 2025), https://www.wpr.org/news/wisconsin-data-centers-revenue-tax-subsidy-microsoft (accessed January 8, 2026).