Big tech avoided Washington state’s data center laws — but it didn’t escape the sales tax
Big tech companies scored a big win in Washington state with the defeat of a law regulating energy efficiency and the environmental impacts of data centers — but they lost an important tax break for the facilities with the 11th-hour passage of Senate Bill 6231.
The state Legislature ended its 2026 session Thursday night shortly after signing SB 6231, which ends the sales tax break on equipment and labor needed to renovate existing data centers. The measure preserved the tax benefits of the new properties.
Dan Diorio, vice president of national policy for the Data Center Coalition, predicted a major fallout, calling it “self-inflicted damage to the national economy” that would ultimately cost jobs and tax dollars, creating “uncertainty in the state’s business climate.”
By 2023, data centers provided nearly 9,000 jobs, and 39,000 indirect jobs in Washington, according to a PwC report commissioned by the Data Center Coalition. The sector generated $1.8 billion in state and local tax revenue.
Equipment inside data centers is typically replaced every three to five years, Diorio said.
The tax break will expire on July 1. The state Department of Finance estimates that its elimination will bring in $63.1 million in the current biennium and $143.9 million in the 2027-29 period.
“We have to make many difficult decisions this year as we try to balance the budget,” said Sen. Noel Frame, D-Seattle, the bill’s sponsor, in earlier public testimony.
But while the bill passed, data center owners followed the far-reaching rules included in House Bill 2515. The measure was nearing a legislative deadline last month when Microsoft pulled out in opposition.
“We respectfully urge the committee not to advance the bill without significant changes,” said Lauren McDonald, Microsoft’s senior director of Washington state government affairs, before the Senate committee. He described the law as “anti-competitive in a different way.”
Microsoft has approximately 30 data centers in Washington, while Amazon has historically focused its Pacific Northwest data center in Oregon. Amazon did not testify on the bill, but the Seattle Times reported that both companies wanted changes to the bill.
Opponents of HB 2515 — including representatives of the technology sector, labor unions and local municipalities that have benefited financially from the centers — have argued that data centers support critical computing infrastructure, create jobs and provide additional property tax revenue.
But across the US, leaders and communities at all levels are concerned about the damage caused by the proliferation of data centers that power the Internet and AI. President Trump earlier this month called on the largest technology companies in the White House to promise not to pay electricity bills.
HB 2515 would have consolidated that commitment and created rules for facilities to disclose their data center energy and cooling water consumption. It also sets requirements for clean energy use and mandates that data center owners share forecasts of their energy needs.
The legislation was supported by environmental groups, tribal nations and taxpayer advocates.
“Some of the largest and most powerful corporations in the world have made a huge effort to lobby, delay, and ultimately stop this legislation,” said Rep. Beth Doglio, D-Olympia, sponsor of HB 2515. She added that she is still determined to continue the fight.
