Data Center tax incentives signed into law, will create Illinois jobs

Governor JB Pritzker signed legislation into law today supported by State Representative Keith R. Wheeler, R-Oswego, to provide the state’s first incentives for data centers who create jobs and invest at least $250 million in new projects.

The incentive, passed as part of Senate Bill 690, would exempt qualifying data centers from state and local sales tax on equipment inside the facilities, such as cooling and heating equipment, servers and storage racks. To qualify, a data center must invest at least $250 million in the facility and hire at least 20 full-time employees over five years, among other qualifications. The bill also includes an additional benefit for locating in an underserved area.

“I voted for and helped to pass the package that includes this data center tax incentive to create Illinois jobs for Illinois families,” Representative Wheeler said. “The Chicago area ranks third in the country for data center capacity, but industry experts have long cautioned that without a tax incentive to attract and retain the facilities, Illinois is at risk of falling behind. With this new law, Illinois is poised to become a destination for economic growth in the tech industry.”

The only markets in the country with more data center capacity (measured in megawatts) than the Chicago area are Northern Virginia, home to many of Amazon’s data centers, and the Dallas-Fort Worth area, according to information from real estate firm CBRE.

The Chicago market is 40 percent smaller than the Northern Virginia market, which grew 16 percent between June 2017 and June 2018, according to a January report from the Illinois Chamber of Commerce Foundation. The Chicago market grew only 7 percent during that time.

Data centers are large facilities containing computers that process and distribute large amounts of information for a wide range of industries, storing images, emails, word documents and more. They generated approximately $321.7 million in state and local revenue in Illinois in 2017. Illinois saw 31,500 high-paying jobs within the industry, as well as $54.1 million in construction labor income for 820 workers.