Explainer
Taxes and incentives
There are two different tax questions here and they get mixed up constantly. One is state sales tax on equipment. The other is local property tax.
What it is, in plain words
State sales and use tax applies when a company buys equipment. Kentucky has a law that exempts qualifying data center equipment from it. That’s a state tax base, decided in Frankfort.
Local property tax is separate. It’s assessed on land and buildings and split among the county, the schools, and other districts. Any break there comes from a local arrangement, usually a payment in lieu of taxes or an industrial revenue bond.
So when someone says a project is or isn’t getting a tax break, ask which of the two they mean.
What the evidence actually shows
The exemption is KRS 139.499, effective July 15, 2024, covering the purchase, use, storage, installation, repair, and replacement of qualifying data center equipment. It was not amended in 2025.[1]
The dollar thresholds and the length of the exemption aren’t in that statute. KRS 139.499 defines them by cross-reference, and the numbers live in KRS 154.20-220, amended effective June 27, 2025.[2] A summary citing only 139.499 for a dollar figure is citing the wrong section.
Minimum capital investment, which must be made on or before the fifth anniversary of preliminary approval:[2]
- $450,000,000 in a county with population equal to or greater than 100,000[2]
- $100,000,000 in a county with population greater than 50,000 but less than 100,000[2]
- $25,000,000 in a county with population of not more than 50,000[2]
- $150,000,000 for a project organizer[2]
Population is set using the county’s estimate from the most recently available five-year American Community Survey at the time of application.[2]
How long the exemption lasts depends on the investment, not the county:[2]
- 50 years for a project with capital investment of $450,000,000 or more[2]
- 25 years for a project with capital investment under $450,000,000[2]
- 15 years for a qualified data center project of a project organizer[2]
A project is not a qualified project if any of these apply:[2]
- It replaces data centers already in Kentucky.[2]
- It applies for or accepts any other incentive under KRS Chapter 154.[2]
- It benefits from the crypto-mining electricity exemption.[2]
That middle one matters. It bars stacking other Chapter 154 incentives.[2]
The reporting is public by statute
Each September 1, the company files a report with the Department of Revenue. It lists the county, the equipment bought, and the sales tax not paid, certified by an independent third party. Each November 1, the Department passes that to the legislature’s Interim Joint Committee on Appropriations and Revenue.[1]
Then the statute says that information “shall not be considered confidential taxpayer information” and isn’t subject to the provisions that otherwise prohibit disclosure.[1] Per-project tax break data is expressly public. That’s a document you can ask for by name.
What’s contested or unknown
The August 6, 2026 executive order says developers must pay their fair share of state, local, and school taxes.[4] An executive order doesn’t repeal a statute, and these are different tax bases anyway. Read them as separate instruments, not a contradiction.
EPIC recommends the fiscal cost of the exemption “warrants periodic monitoring by an appropriate state agency.” That’s a polite way of saying nobody tracks it.[5] Its cautionary comparison is Texas. The Chapter 313 program there grew from about $130 million in 2021 to over $1 billion a year in 2023, then expired.[5]
There’s a second, local mechanism too: industrial revenue bonds. That’s on the Kentucky page.
Questions worth asking at a hearing
- Is this project applying for the KRS 139.499 exemption? Which tier, and what term?
- Is there a payment in lieu of taxes? What amount, on what schedule, and does it escalate?
- Are industrial revenue bonds involved, and who issues them?
- What does the school district actually receive, and in what year?
- Are the revenue and job projections independent, or produced for the developer?
- Where can residents read the annual KRS 139.499 report for this project?
- What happens to the terms if the project is sold, or builds fewer phases than announced?