Colorado legislators have reintroduced a bill that would grant sweeping tax incentives to data center operators, aiming to make the state more competitive in attracting a rapidly expanding industry tied to artificial intelligence and cloud computing. House Bill 26-1030 would provide a 100% sales and use tax exemption for qualifying data centers for at least 20 years, a proposal similar to one that stalled last session amid environmental concerns. Supporters, including moderate Democrats and tech industry groups, argue Colorado is losing out to at least 37 other states that already offer such incentives, with industry leaders saying the exemption is often a prerequisite for major investments from hyperscale operators like Amazon, Microsoft, and Meta.

Opponents, led by environmental and progressive groups, warn the bill amounts to a costly “handout” that could strain the power grid, raise utility rates, and undermine climate goals as data centers’ electricity demand surges nationwide. While a fiscal analysis has not yet been released, prior estimates suggest the exemption could reduce state revenue by about $38 million annually. Bill sponsors counter that HB-1030 includes safeguards, such as requiring utilities to verify that new data centers won’t unfairly impact other ratepayers and mandating that most new power generation tied to data centers come from clean energy sources, rising to 100% by 2040. The proposal sets up a new state authority to oversee development, reflecting lawmakers’ attempt to balance economic growth with environmental and consumer protections.

Bill to provide tax breaks for data centers reintroduced by Colorado lawmakers

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