Bill Description: House Bill 897 would limit the scope of state tax incentives for data centers in Idaho.
Rating: +1
NOTE: House Bill 897 is related to House Bill 820 (2026) and House Bill 609 (2026). All three bills would address the special state tax incentives for new data centers in Idaho that were created by House Bill 521 (-1) in 2020. There have been multiple efforts to scale back these incentives since, including House Bills 46 (+2), 159 (+2), and 328 (+2) in 2023 and House Bill 315 (+1) in 2025. House Bill 328 (2023) was the only one of these reform efforts to become law. House Bill 897 would attempt to further scale back the incentives.
Does it increase government redistribution of wealth? Examples include the use of tax policy or other incentives to reward specific interest groups, businesses, politicians, or government employees with special favors or perks; transfer payments; and hiring additional government employees. Conversely, does it decrease government redistribution of wealth?
Idaho law contains a cronyistic provision that offers significant incentives and tax breaks to large data centers (those involving at least a $250 million investment and creating at least 30 jobs), including a permanent sales tax exemption.
House Bill 897 would amend Section 63-3622VV, Idaho Code, to limit the duration of the existing sales tax incentive to “a period of twenty (20) years from the date a qualifying business entity’s final approval certification is issued by the state tax commission.”
It says that for “purchases related to data centers that commenced construction on or after April 1, 2026, the exemption provided in this section shall apply only to eligible server equipment.”
It would also amend the definition of what businesses could qualify for the incentive by requiring that, after April 1, 2026, the business “receive electricity service under an electricity rate schedule or energy service agreement that fully recovers from the qualifying business entity all costs incurred by the utility in providing electricity to the property for which the exemption is claimed.”
It would also require the business to “provide written notice to the local water provider serving such proposed data center’s location and the department of water resources detailing the anticipated water consumption needs of the data center to ensure that the water consumption is compatible with the location in which the data center is being constructed.”
The bill would also amend Section 63-4502, Idaho Code, which provides for a property tax exemption for an entity whose property has a net taxable value over $400 million and makes a new capital investment of at least $1 billion.
The new language would limit the current exemption to “a new plant and building facilities that commenced construction prior to April 1, 2026,” and say that going forward, the exempt amount will be adjusted annually based on the percentage change in the aggregate property tax budgets of all taxing districts levying on that property.
This bill would take steps to reduce the negative fiscal impact these cronyistic tax incentives can have on general taxpayers.
(+1)
