Rural Data Centers — Sales/Use Tax Exemption

Rural Data Centers — Sales/Use Tax Exemption

Offers sales and use tax exemption for qualifying rural Washington data centers in construction and equipment purchases.

Eligibility · United States · US-WA

Washington state provides a sales and use tax exemption for qualifying data center facilities located outside the state's major urban counties, exempting purchases of eligible server equipment, power infrastructure, and labor and services for installing qualifying power infrastructure. The exemption is authorized under RCW 82.08.986 and RCW 82.12.986 and is administered by the Washington Department of Revenue (DOR). The Rural Data Centers exemption applies to facilities of 100,000 square feet or more with building permits issued in specified windows, and the program is valid through July 1, 2048, giving long-horizon capital projects a stable incentive window.

To qualify, a facility must be operated by a for-profit business whose primary purpose is commercial activity — state and federal government entities, tribal governments, political subdivisions of Washington, and nonprofit organizations are explicitly excluded. Qualifying businesses may claim the exemption for both direct owner-operators of eligible data centers and qualifying tenants leasing space within a certified facility. A parallel Urban Data Centers exemption applies to facilities in King, Pierce, or Snohomish County with a shorter expiration of July 1, 2038 and a limited annual certificate pool. The rural program does not carry the same annual certificate cap.

The exemption is claimed on excise tax returns rather than through a competitive grant application process. Buyers provide vendors with a completed Buyer's Retail Sales Tax Exemption Certificate, and businesses registered in Washington must also complete the Buyer's Sales and Use Tax Preference Addendum in the My DOR portal when filing excise returns. Because the exemption covers both server equipment and power infrastructure — which together constitute the dominant capital cost in hyperscale and edge data center builds — the benefit can be substantial for large investments. DOR should be contacted at 360-705-6705 for eligibility verification prior to project initiation.