Utah cannot quantify the exact revenue being lost due to sales tax exemptions for data centers, according to an investigation by The Utah Investigative Journalism Project published on September 6. The state no longer collects the data required to determine the cost of these breaks to public coffers.
The loss of visibility regarding these exemptions occurred after a 2009 legislative change removed a reporting rule for certain state and local sales tax exemptions used by various entities. Utah State Tax Commission Deputy Executive Director Jason Gardner stated that filings were uneven even prior to that change.
Rep. Jill Koford, a Republican from Ogden, suggested the state should examine the issue more closely. Koford noted that the rapid growth and scale of data-center investment raises questions about whether the current framework and available data are adequate for evaluation. She remarked that the 2009 legislative discussion focused on traditional manufacturing and semiconductor-related equipment exemptions rather than modern hyperscale AI data centers.
Kasia Tarczynska, an analyst who authored a Good Jobs First report, noted that many tax provisions were designed for an industry much smaller than the current one. The report found that states disclosing these costs showed revenue losses ranging from $830,000 to $1.9 billion in 2025.
While Utah lawmakers required more transparency regarding water consumption in 2026, the tax implications remain unclear. This comes amid national concerns regarding how data centers impact electricity, land, and water usage.
The debate in Utah is part of a larger national discussion about the infrastructure costs of AI. While some states like Nebraska, Ohio, Illinois, and Massachusetts have paused data-center tax incentives, business advocates like the Data Center Coalition argue these exemptions are necessary. Khara Boender, a spokesperson for the Data Center Coalition, stated that such policies align data center tax treatment with manufacturing equipment exemptions found in 41 states.
