Michigan House Bill HB5397

Michigan 2025-2026 Regular Session

• Introduced: 12/17/25
• Refer: 12/17/25

Caption

Use tax: exemptions; data center exemption; eliminate. Amends sec. 21 of 1937 PA 94 (MCL 205.111) & repeals sec. 4cc of 1937 PA 94 (MCL 205.94cc).

Impact

By removing these exemptions, the state anticipates an increase in tax revenues from data centers, which is notable given their growing presence and importance in today's economy. Such a decision might bolster the state’s general fund, allowing for greater discretionary spending by the legislature. However, the adjustment may also raise concerns among data center operators who could find their operational costs increasing, potentially affecting their decisions to expand or maintain operations in Michigan. Some proponents of the adjustment argue that the state needs to keep up with changing economic environments and that tax obligations should reflect corporations benefitting from state resources.

Summary

House Bill 5397 aims to amend the Use Tax Act of 1937, specifically by adjusting the provisions related to exemptions for data centers. The bill proposes the elimination of the exemption currently provided under section 4cc of the act, which allows certain personal property used in data centers to be exempt from use tax. This change represents a significant shift in tax policy concerning technology companies and data operations, which could potentially increase state revenue by taxing an industry that has been enjoying these exemptions to date.

Contention

The contention surrounding HB 5397 mainly pivots on the balance between fostering a favorable business climate and generating needed tax revenue for state-funded services. Opponents of the bill warn that taxing data centers could drive these businesses to relocate to states with more favorable tax conditions. Conversely, supporters argue that it is crucial for large corporations to contribute to the state’s infrastructure and services, especially as they benefit significantly from public resources and investments. The influence of this bill on local policies regarding data center taxation may also reflect broader trends in state governance and regional economic development strategies.