Sales and Use Tax and Property Tax - Exemptions for Data Centers - Repeal
HB0560 repeals two existing tax incentives for qualified data centers in Maryland. First, it eliminates the sales and use tax exemption for certain personal property purchased or leased for use at a qualified data center. Second, it repeals the authority for counties and municipal corporations to reduce or eliminate the property tax assessment on qualified data center personal property. The bill is framed as a repeal measure rather than a new incentive program, and it would remove the statutory definitions, application process, certification rules, renewal periods, recordkeeping requirements, and revocation/recapture provisions tied to the sales tax exemption.
Under the bill, the affected provisions in the Tax-General Article and Tax-Property Article would be deleted, ending state-level sales tax relief and local-option property tax relief for data center equipment and related infrastructure. This would affect operators of both co-located/hosting data centers and enterprise data centers, as well as vendors selling qualifying equipment and local governments that currently have discretion to lower assessments. The bill would take effect July 1, 2026, if enacted.
HB0560 would amend Maryland tax law by repealing Section 11-239 of the Tax-General Article and Section 7-248 of the Tax-Property Article, thereby removing the statutory framework for data center tax exemptions. The practical effect would be to subject qualified data center personal property to the normal sales and use tax and to eliminate local authority to reduce or eliminate property tax assessments for that property. It would also end the related administrative processes involving the Department of Commerce, the Comptroller, annual certification, renewal, compliance monitoring, and tax recapture for noncompliance.
No committee transcript or vote record is provided, so there is no documented debate or recorded vote to gauge sentiment. Based on the bill text and sponsorship, the measure appears to be a policy reversal aimed at ending preferential tax treatment for data centers. The absence of supporting fiscal or committee commentary in the provided materials means the overall sentiment cannot be assessed beyond the fact that the bill was introduced and assigned for hearing in the House Ways and Means Committee.
The main point of contention is likely the policy choice to repeal incentives that data center operators may view as important to investment and job creation, versus the state and local revenue gains from ending those exemptions. Supporters of repeal would likely argue that data centers should pay standard taxes and that the incentives are unnecessary or too costly, while opponents would likely emphasize economic development, capital investment, and competition with other states. The bill’s job-creation and investment thresholds, annual certification, and long renewal periods suggest the repealed program was designed to target large projects, so debate would likely center on whether those benefits justified the foregone tax revenue.