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    © 2025 Veeto.
    SB-58
    Budget & Economy

    Sales and Use Tax Law: exemptions: certified data center facilities.

    Introduced
    CA
    ∙
    2025-2026 Regular Session
    0
    0
    Track
    Track

    Key Takeaways

    • Establishes a partial state sales tax exemption for certified data center facilities starting January 2026.
    • Requires data centers to create 20 jobs and invest $200 million to qualify for tax benefits.
    • Mandates facilities use 70% carbon-free energy and implement water conservation measures.
    • Limits tax benefits to 20 years and requires annual compliance monitoring and reporting.

    Summary

    Senator Padilla's data center tax initiative would establish partial sales tax exemptions for certified facilities that meet stringent environmental and economic development requirements in California. Starting January 2026, qualifying data centers could reduce state sales taxes to 2% on equipment purchases by creating at least 20 high-wage jobs, investing $200 million or more, and adhering to strict carbon-free energy and water conservation standards.

    To maintain certification, facilities must source at least 70% of their energy from carbon-free providers, generate 50% of power through on-site systems, and implement water recycling and conservation measures. The bill prohibits diesel backup generators and requires battery storage systems. These requirements align data center growth with California's renewable energy goals while creating skilled employment opportunities.

    The tax benefit applies only to state-level charges, preserving local sales taxes and dedicated funding streams. Facilities face certification revocation if they fail to maintain compliance after notice and opportunity to cure deficiencies. The California Department of Tax and Fee Administration must analyze and report annually on program participation and exemption amounts starting in 2027 to evaluate effectiveness.

    The measure includes detailed definitions of qualifying equipment, from servers and cooling systems to construction materials, while excluding office supplies and short-term rentals. This framework aims to provide clarity for implementation while ensuring benefits support core data center operations rather than ancillary business activities.

    Key Dates

    Next Step
    Referred to the Senate Standing Committee on Revenue and Taxation
    Next Step
    Senate Committee
    Referred to the Senate Standing Committee on Revenue and Taxation
    Hearing has not been scheduled yet
    Introduced
    Senate Floor
    Introduced
    Introduced. Read first time. To Com. on RLS. for assignment. To print.

    Contacts

    Profile
    Tim GraysonD
    Senator
    Committee Member
    Not Contacted
    Not Contacted
    Profile
    Tom UmbergD
    Senator
    Committee Member
    Not Contacted
    Not Contacted
    Profile
    Angelique AshbyD
    Senator
    Committee Member
    Not Contacted
    Not Contacted
    Profile
    Steve PadillaD
    Senator
    Bill Author
    Not Contacted
    Not Contacted
    Profile
    Jerry McNerneyD
    Senator
    Committee Member
    Not Contacted
    Not Contacted
    0 of 6 row(s) selected.
    Page 1 of 2
    Select All Legislators
    Profile
    Tim GraysonD
    Senator
    Committee Member
    Profile
    Tom UmbergD
    Senator
    Committee Member
    Profile
    Angelique AshbyD
    Senator
    Committee Member
    Profile
    Steve PadillaD
    Senator
    Bill Author
    Profile
    Jerry McNerneyD
    Senator
    Committee Member
    Profile
    Suzette ValladaresR
    Senator
    Committee Member

    Get Involved

    Act Now!

    Email the authors or create an email template to send to all relevant legislators.

    Introduced By

    Steve Padilla
    Steve PadillaD
    California State Senator
    10% progression
    Bill has been formally introduced and read for the first time in its house of origin (1/8/2025)

    Key Takeaways

    • Establishes a partial state sales tax exemption for certified data center facilities starting January 2026.
    • Requires data centers to create 20 jobs and invest $200 million to qualify for tax benefits.
    • Mandates facilities use 70% carbon-free energy and implement water conservation measures.
    • Limits tax benefits to 20 years and requires annual compliance monitoring and reporting.

    Get Involved

    Act Now!

    Email the authors or create an email template to send to all relevant legislators.

    Introduced By

    Steve Padilla
    Steve PadillaD
    California State Senator

    Summary

    Senator Padilla's data center tax initiative would establish partial sales tax exemptions for certified facilities that meet stringent environmental and economic development requirements in California. Starting January 2026, qualifying data centers could reduce state sales taxes to 2% on equipment purchases by creating at least 20 high-wage jobs, investing $200 million or more, and adhering to strict carbon-free energy and water conservation standards.

    To maintain certification, facilities must source at least 70% of their energy from carbon-free providers, generate 50% of power through on-site systems, and implement water recycling and conservation measures. The bill prohibits diesel backup generators and requires battery storage systems. These requirements align data center growth with California's renewable energy goals while creating skilled employment opportunities.

    The tax benefit applies only to state-level charges, preserving local sales taxes and dedicated funding streams. Facilities face certification revocation if they fail to maintain compliance after notice and opportunity to cure deficiencies. The California Department of Tax and Fee Administration must analyze and report annually on program participation and exemption amounts starting in 2027 to evaluate effectiveness.

    The measure includes detailed definitions of qualifying equipment, from servers and cooling systems to construction materials, while excluding office supplies and short-term rentals. This framework aims to provide clarity for implementation while ensuring benefits support core data center operations rather than ancillary business activities.

    10% progression
    Bill has been formally introduced and read for the first time in its house of origin (1/8/2025)

    Key Dates

    Next Step
    Referred to the Senate Standing Committee on Revenue and Taxation
    Next Step
    Senate Committee
    Referred to the Senate Standing Committee on Revenue and Taxation
    Hearing has not been scheduled yet
    Introduced
    Senate Floor
    Introduced
    Introduced. Read first time. To Com. on RLS. for assignment. To print.

    Contacts

    Profile
    Tim GraysonD
    Senator
    Committee Member
    Not Contacted
    Not Contacted
    Profile
    Tom UmbergD
    Senator
    Committee Member
    Not Contacted
    Not Contacted
    Profile
    Angelique AshbyD
    Senator
    Committee Member
    Not Contacted
    Not Contacted
    Profile
    Steve PadillaD
    Senator
    Bill Author
    Not Contacted
    Not Contacted
    Profile
    Jerry McNerneyD
    Senator
    Committee Member
    Not Contacted
    Not Contacted
    0 of 6 row(s) selected.
    Page 1 of 2
    Select All Legislators
    Profile
    Tim GraysonD
    Senator
    Committee Member
    Profile
    Tom UmbergD
    Senator
    Committee Member
    Profile
    Angelique AshbyD
    Senator
    Committee Member
    Profile
    Steve PadillaD
    Senator
    Bill Author
    Profile
    Jerry McNerneyD
    Senator
    Committee Member
    Profile
    Suzette ValladaresR
    Senator
    Committee Member