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12 July 2019

How Indiana’s tax breaks could lead to major data centre development

Indiana is making massive changes to draw technology companies and data centres into the state.

First introduced in January, House Bill 1405 passed in Indiana this week with a unanimous vote. This bill creates tax exemptions for data centres that invest between US$25m and US$150m in the state over a five-year period. The investment amount is dependent upon the population of the county in which the centre is built, and includes clauses for locally sourced materials and labour. Exemptions include IT equipment, software, networking equipment, generators and power consumption from business personal property taxes, as well as the state's 7% sales tax.

Currently, no major data centres exist in the state, which makes this an important move to increase infrastructure and draw in technology companies. As many of the bordering states begin to look at incentives to draw in data centres, this move was strategic to increase appeal to Indiana. In fact, the announcement came shortly before Illinois passed their own data centre tax incentive legislation. With data campuses – large properties consisting of multiple data centres – gaining popularity, a US$25m to US$150m investment is easily achievable over five years. 

The goal of this new bill is to draw technology and innovation into Indiana and position the state as an area where companies can expand. Data centres create infrastructure that is imperative for large technology companies. With data centres popping up around the U.S., Indiana hopes that these tax incentives will help it compete with other Midwestern states. 

Indiana proves to be an excellent location to build a data centre. A large, rural landscape, access to Lake Michigan and a variety of other clean water sources make it an ideal area for data centres. The state can provide water for cooling the centres without having to pump it in from afar. There also is less competition in Indiana. Digital Crossroads of America Data Center is the only planned data centre for the state, and it has yet to break ground. This means that data centres can take advantage of the tax breaks without having to compete. The desire to create technology-focused jobs will surely lead to other major benefits for data centres that invest in the state. 

Stock Data Centre internal image2

It won’t be long until other data centres take advantage of the new laws to create hyperscale facilities. Although the tax breaks vary by county, it still proves to be a huge advantage for data centres looking to build. While other centres are looking towards technology innovation hubs, these incentives may prove to be the perfect way for data centres to get in on the ground floor of a potential new hub.

Three keys to data centre development in Indiana:

With competition rising in the race to draw in technology companies and increase job opportunities, Indiana is one state that is doing it right. Below is a summary of the three reasons that this Midwestern state is poised for significant data centre growth:

1. Tax breaks: First introduced in January, House Bill 1405 recently passed in Indiana, allowing tax exemptions for data centres that invest between US$25m and US$150m, depending on the county, in the state over a five-year period. There are also clauses in the bill that stipulate that centres use locally-sourced materials and labour.

2. Less competition: With no major data centres currently existing in the state, and only one planned (Digital Crossroads of America Data Center), this is an excellent time to stay ahead of the trend and take advantage of the lack of competition. Data centres will benefit from the desire to bring them in through a variety of initiatives, including the tax breaks, without an oversaturated market.

3. Ideal environment: Located on Lake Michigan, with a large land mass and plenty of smaller lakes, Indiana is the ideal state to meet the needs of data centres. There is plenty of access to clean water to cool the data plants. Also, the land mass makes it ideal for large data centres or campuses.

Although we’re seeing an increase in popularity in desert states, such as Nevada and Arizona, in attracting new data centre developments, Indiana’s push to increase technology-related jobs will intrinsically benefit the data centre community. Powerful data centres will draw technology companies into the state, which will create jobs and stimulate the economy in Indiana. The newly introduced tax breaks show that this state is willing to compete to bring in the services that technology companies are looking for. 


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