Economic development: other; general sales tax act; amend to reflect elimination of the Michigan strategic fund. Amends sec. 4ee of 1933 PA 167 (MCL 205.54ee). TIE BAR WITH: SB 0631'25
Senate Bill 643 would amend Michigan’s General Sales Tax Act to expand and restructure the sales tax exemption for data center equipment. The bill preserves the existing exemption for qualified data centers and colocated businesses, while adding a new, more detailed exemption for “enterprise data centers” that receive a certificate from the state’s economic development authority. To qualify, a facility must meet substantial investment and employment thresholds, satisfy building and operational requirements, and comply with conditions related to green building certification, municipal water use, and clean energy procurement.
The bill also sets up an application, reporting, audit, and revocation framework for these enterprise data center certificates. It requires annual reporting on purchases and economic activity, allows the state to revoke certificates if facilities no longer qualify, and imposes repayment obligations if a certificate is revoked. The exemption for enterprise data centers would generally run through 2050, but could extend to 2065 for certain brownfield or former power plant sites. New certificates could not be issued after December 31, 2029, though existing certificates would remain valid.
The bill would amend MCL 205.54ee in the General Sales Tax Act to create and govern a new sales tax exemption category for enterprise data centers, while retaining the current exemption for qualified data centers and colocated businesses. It would shift administration to the Michigan Strategic Fund bureau, which would issue certificates, review compliance, collect reports, and revoke certificates when necessary. The bill also references related state laws governing brownfield redevelopment, clean energy, property tax benefits, and economic development administration, and it would affect data center operators, contractors, utilities, and local governments that may approve property tax benefits by resolution.
The bill appears generally supportive of data center development and economic investment, with a strong pro-incentive orientation. Its structure suggests lawmakers want to encourage large-scale data center projects by offering tax relief, but only if projects deliver substantial capital investment, high-wage jobs, and environmental safeguards. The inclusion of clean energy, water, and green building requirements indicates an effort to balance economic development with public-interest concerns. No committee transcript or vote record was provided, so there is no direct evidence of formal support or opposition in the available materials.
The main points of contention are likely to be the size and duration of the tax exemption, the public cost of subsidizing data center development, and the bill’s restrictions on property tax benefits and electric service rates. Local governments may be sensitive to the limits on property tax incentives, although they can approve such benefits by resolution. Utilities and ratepayers may also be affected by the bill’s requirement that facilities not shift costs onto residential customers, and by the clean-energy procurement provisions. Environmental and community concerns are addressed through the bill’s water-use and sustainability requirements, but those same requirements may be seen by developers as burdensome compliance conditions.