Florida’s Data Center Sales Tax Exemption Faces Uncertainty After New Legislation
- DPS
- Jul 1
- 3 min read
A key sales tax exemption that has supported the growth of Florida’s data center industry since 2017 is now under threat—potentially reshaping the economic landscape for operators, contractors, and tenants alike.
A Pillar of Growth Since 2017
Florida’s sales tax exemption for data centers has been in effect since 2017, after a failed attempt to introduce similar legislation the previous year. The policy was designed to boost the state’s competitiveness in the booming data infrastructure sector by eliminating state and local sales taxes—6% and 1–1.5%, respectively—on qualifying purchases.
The exemption covers:
IT equipment and construction materials
Electricity usage
Local sales taxes levied by counties
It has been a vital cost-saving measure for developers and tenants alike, especially in a state competing with more established data center markets like Virginia and Texas.
A New Threshold: 100MW or Lose the Benefits
Although the 2017 legislation was intended to offer permanent relief, new developments under House Bill 7031 (HB 7031) introduce a significant condition: data centers must now undergo a review every five years. To retain their exempt status, facilities must demonstrate a minimum IT load of 100 megawatts (MW). Those that fall short will lose the exemption, including the critical benefit for electricity purchases.
This threshold presents a major challenge. According to Data Center Map, none of Florida’s 124 operational data centers currently exceeds the 100MW IT capacity mark. Most are mid-sized facilities located in key metros like Miami, Tampa, and Orlando.
Legal Experts Warn of Immediate Impacts
In a recent National Law Review article, Florida-based attorneys Joshua B. Forman and Marvin A. Kirsner of Greenberg Traurig LLP raised alarms about the ramifications of HB 7031.
They noted that the removal of the electricity sales tax exemption could have far-reaching consequences:
“Since the exemption was meant to be permanent, and the benefit thereof was intended to be passed through to data center tenants, the loss of the exemption for electricity may hinder landlords’ ability to keep existing tenants and attract new ones to their data centers.”
The sudden loss of the exemption, effective August 1, would also impact ongoing construction projects. Many contractors may have submitted bids assuming tax-free purchases of building materials and electrical infrastructure.
“If this bill is signed into law, contractors may no longer be able to purchase items tax-free after August 1, and new developments may see higher costs,” Forman and Kirsner warned.
A Wait-and-See Situation
The legal experts acknowledged that the current interpretation of HB 7031 may not have been the legislature’s intent. The hope is that the measure could be revised during the next legislative session, but until then, Florida's data center industry faces a period of regulatory limbo.
This uncertainty could deter future investments, delay expansion plans, and complicate financial forecasting for both new builds and retrofits.
Florida's Future in the Data Infrastructure Economy
Florida has long sought to become a more competitive location for digital infrastructure, leveraging its geographic location, energy reliability, and improving fiber connectivity. However, the imposition of new tax burdens could stall momentum just as other states ramp up their own incentive programs.
As policymakers consider adjustments in the upcoming session, the industry will be watching closely. The outcome may determine whether Florida remains a rising contender in the national data center market—or loses ground to more tax-friendly rivals.
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