Data center operators in Sterling, Virginia, can benefit from the Commonwealth’s Retail Sales and Use Tax Exemption for Data Centers. This exemption applies to qualifying computer equipment and enabling software purchased or leased for use in data centers that meet specific criteria.
Eligibility Requirements:
Capital Investment: A minimum new capital investment of $150 million.
Job Creation: At least 50 new jobs associated with the operation or maintenance of the data center, each paying at least 150% of the prevailing average wage in the locality.
For data centers located in distressed localities—areas with unemployment and poverty rates exceeding the state average—the thresholds are lower:
Capital Investment: At least $70 million.
Job Creation: A minimum of 10 new jobs meeting the same wage criteria.
Exemption Details:
The exemption covers purchases of qualifying computer equipment and enabling software used directly in data center operations, including servers, routers, and backup generators. General building improvements and non-qualifying software are excluded.
Duration and Extensions:
Initially set to expire in 2035, the exemption has been extended for data centers making substantial investments:
Extension to 2040: Requires a capital investment of at least $35 billion and the creation of 1,000 direct new jobs, with at least 100 jobs paying 150% of the prevailing average wage.
Extension to 2050: Requires a capital investment of at least $100 billion and the creation of 2,500 direct new jobs, with at least 100 jobs meeting the wage criteria.
Application Process:
Data center operators must enter into a Memorandum of Understanding with the Virginia Economic Development Partnership to utilize the exemption. Tenants in colocation data centers can also benefit by entering into a Participation Certificate and Agreement.
