In short
Georgia law exempts high-technology data center equipment from state and local sales and use tax. The exemption is found at O.C.G.A. § 48-8-3(68.1). It applies to any AI data center that meets certain investment and job creation thresholds, including AI data centers. The required spending and new jobs depend on the county’s population. Qualifying purchases are tax free through December 31, 2031, after which the law sunsets. During the 2026 legislative session, none of the bills that tried to pause or limit the exemption became law, so the exemption remains fully in force. Developers who claim it cannot also claim certain Georgia income tax credits for the same project, and failing to meet the thresholds triggers full repayment of all taxes that were exempted, plus interest.
What is the Georgia sales and use tax exemption for high-technology AI data centers?
The exemption is a state tax incentive for building and equipping AI data centers. It was created by House Bill 696 in 2018 and first took effect on January 1, 2019. HB 696 (2018) The law exempts sales and use tax on qualifying equipment purchased for a high-technology data center. The original sunset date was December 31, 2028. The legislature extended it to December 31, 2031 through House Bill 1291 in 2022. HB 1291 (2022) The entire paragraph is set to be repealed on January 1, 2032. O.C.G.A. § 48-8-3(68.1)(H)
The exemption covers both the 4 percent state sales tax and local sales taxes, which average about 3.49 percent but can go as high as 5 percent. In the City of Atlanta within Fulton County, for example, the combined rate is 8.9 percent. Georgia Department of Revenue A project buying $1 billion of covered equipment in Fulton County can save about $89 million in sales tax.
The term high-technology data center does not refer to a specific computing workload. It means a facility, campus of facilities, or array of interconnected facilities in this state that is developed to power, cool, secure, and connect the Data Center Owner’s equipment or the computer equipment of the Data Center Owner’s High Technology Data Center Customers, that has an investment budget plan meeting the High-Technology Data Center Minimum Investment Threshold, and that is located wholly within one county in this state unless otherwise approved by the Commissioner. Rule 560-12-2-.117(2)(c) An AI training cluster, a cloud computing warehouse, or a traditional colocation hall all qualify as long as they satisfy the physical and financial requirements.
What equipment does the exemption cover?
The definition of high-technology data center equipment is broad. It starts with computer equipment and then adds a long list of supporting systems. The statute expressly includes these items, namely materials, components, machinery, hardware, software, or equipment, including, but not limited to, emergency backup generators, air handling units, cooling towers, energy storage or energy efficiency technology, switches, power distribution units, switching gear, peripheral computer devices, routers, batteries, wiring, cabling, or conduit. O.C.G.A. § 48-8-3(68.1)(G)(iv)
The law also covers anything used for these purposes.
- to create, manage, facilitate, or maintain the physical and digital environments for computer equipment
- to protect data center equipment from physical, environmental, or digital threats
- to generate or provide constant delivery of power, environmental conditioning, air cooling, or telecommunications services
What is not covered is real property. The rule defines real property as land, buildings, and fixtures attached permanently. Rule 560-12-2-.117(2)(i) So the exemption applies to nearly every mechanical, electrical, and IT system inside the building shell, but not to the shell itself.
What are the investment and job thresholds?
To qualify, an AI data center must meet two numbers over seven consecutive years, namely a minimum amount spent on covered equipment and a minimum number of new quality jobs. The numbers vary by the county where the data center sits, based on the most recent U.S. decennial census population at the time the investment period starts. For exemption certificates applied for on or after May 9, 2022, the thresholds are as shown in the table below.
| County population | Minimum equipment spending over seven years | Minimum new quality jobs |
|---|---|---|
| More than 50,000 | $250 million | 25 |
| 30,001 to 50,000 | $75 million | 10 |
| 30,000 or fewer | $25 million | 5 |
O.C.G.A. § 48-8-3(68.1)(G)(v)(I) to (III)
The county population cutoffs come from the most recent decennial census. For a start date after the 2020 census, the 2020 numbers apply. The Georgia Department of Revenue publishes county-level guidance using the 2020 census for projects applying after May 9, 2022. GDOR
A new quality job is defined by a cross reference to another Georgia statute. It means a job located in Georgia, with a regular workweek of 30 hours or more, that is not a job that is or was already located in Georgia regardless of which taxpayer the individual performed services for, and that pays at least 110 percent of the county average wage. O.C.G.A. § 48-7-40.17(a)(2) The county average wage used for the wage test is the figure from the most recent Georgia Employment & Wages report on the day the job is first filled during the investment period. That wage figure stays fixed for that position for the rest of the investment period. Rule 560-12-2-.117(4)(c)(1)
Example. The Digital Realty Fort Gillem campus is planned for Clayton County, which has a population well above 50,000. The project represents over $2 billion in investment. Atlanta Journal-Constitution It falls into the highest tier and must spend at least $250 million on covered equipment and create at least 25 quality jobs within its seven year window. A project of that scale easily clears both thresholds, but the developer still must document them and report annually.
Certificates applied for and received before May 9, 2022 use older thresholds, namely 20 jobs plus $250 million for counties over 50,000, $150 million for counties 30,001 to 50,000, and $100 million for counties under 30,000. Rule 560-12-2-.117(4)(b) Those older thresholds are now largely historical, as new projects fall under the amended rules.
How does the investment period and the sunset work?
The data center owner chooses an exemption start date, also called the investment start date, that must be on or after July 1, 2018. From that date, the owner has seven consecutive years to meet the spending threshold and create the required jobs. The seven year period may not extend beyond December 31, 2031. Rule 560-12-2-.117(2)(g)(3)
Exempt purchases are allowed from the start date through December 31, 2031, no matter when the seven years end. After that, the law sunsets and no further exempt purchases can be made. The entire exemption paragraph is repealed on January 1, 2032. O.C.G.A. § 48-8-3(68.1)(A), (H) and Rule 560-12-2-.117(5)(e)
This means a later start leaves less time to make tax free purchases. A developer who picks a start date of January 1, 2026 has until December 31, 2031 to buy equipment exempt from tax. That is six calendar years, but only part of 2031. The spending threshold must be reached within the seven years, so the developer would need to have $250 million in equipment purchased by January 1, 2033 at the latest, but exempt purchases stop on December 31, 2031. That makes the effective deadline earlier.
How do you get the exemption?
The process is built around an exemption certificate issued by the Georgia Department of Revenue. A data center owner must apply to the commissioner electronically through the Georgia Tax Center. The application asks for the owner’s legal name, mailing address, data center location, chosen start date, Georgia income tax filing and payment history, the value of real property owned in Georgia, a limited waiver of confidentiality, and documentation showing that the project is likely to meet the required investment threshold. Rule 560-12-2-.117(5)(a)(4)
The commissioner may issue a certificate only after deciding that the data center will more likely than not meet the minimum investment threshold. O.C.G.A. § 48-8-3(68.1)(C)(i) The commissioner may also require a surety bond of up to $20 million as a condition of issuing the certificate. O.C.G.A. § 48-8-3(68.1)(C)(iv)(I)
Once the certificate is in hand, the data center owner can buy qualifying equipment without paying sales tax by giving the seller a copy of the certificate. For sales of high-technology data center equipment, the statute requires the seller to collect tax unless the purchaser provides a certificate from the commissioner. O.C.G.A. § 48-8-3(68.1)(B)
A data center customer, a tenant or user with a contract of at least 36 months for data center services with a certified owner, may also apply for its own exemption certificate to buy equipment tax free. Rule 560-12-2-.117(2)(d), Rule 560-12-2-.117(3)(a)(5), Rule 560-12-2-.117(5)(a)(1) This allows a multi tenant facility to extend the benefit to each anchor tenant.
What compliance obligations and risks come with the exemption?
Each AI data center with a certificate must file an annual report stating the amount of taxes exempted, the number of new quality jobs, and the total payroll from construction, maintenance, and operation. O.C.G.A. § 48-8-3(68.1)(D)(i)
The serious risk is clawback. If the commissioner later determines that the AI data center failed to meet its minimum investment threshold, the AI data center must repay all taxes that were exempted or refunded. The payment is due within 90 days of notice, and it carries interest at the rate set in O.C.G.A. § 48-2-40. The repayment obligation is calculated even if the ordinary statute of limitations would otherwise block collection. O.C.G.A. § 48-8-3(68.1)(C)(iii)(II) A shortfall triggers full repayment and there is no time bar defense.
The surety bond of up to $20 million can cover part of that liability, but the total sales tax on a large equipment spend can far exceed that. For a $250 million equipment outlay in a 7 percent combined tax zone, the total tax is $17.5 million, which a bond could cover. For a $1 billion spend, the tax bill is $70 million, leaving $50 million uncovered by the bond. Developers must plan to meet the threshold or assume the repayment risk.
The exemption also forces a choice with respect to other incentives. A high-technology data center cannot claim the Georgia income tax credits under O.C.G.A. §§ 48-7-40 through 48-7-40.33 or § 36-62-5.1 for the same project if it uses this sales tax exemption. O.C.G.A. § 48-8-3(68.1)(F) However, if the Department determines that the Data Center Owner must repay all taxes exempted or refunded, the owner of the High-Technology Data Center and its Related Members may, despite any time limits, file amended income tax returns claiming any credit to which they would have been entitled under O.C.G.A. §§ 48-7-40 through 48-7-40.33 or O.C.G.A. § 36-62-5.1 but for having claimed the exemption. Rule 560-12-2-.117(9)(c), implementing O.C.G.A. § 48-8-3(68.1)(F) So the door is not permanently closed, but a project that starts with the sales tax exemption cannot stack it with those income credits.
How does this exemption relate to the separate high-tech computer equipment exemption?
Georgia also has a companion exemption under O.C.G.A. § 48-8-3(68). It is for high-technology companies with specific NAICS codes that buy more than $15 million in computer equipment each year. Beginning January 1, 2024, taxpayers using that exemption must pay 10 percent of the state and local sales and use taxes on the first $15 million of purchases each year. Ga. Comp. R. & Regs. r. 560-12-2-.107
That is a different program from the data center exemption under (68.1). A company that operates its own single tenant AI data center could potentially claim either or both, depending on its NAICS code and how it structures its purchases. The published rules do not clearly resolve how the two exemptions interact. Developers should analyze which path produces the larger benefit and document the intended reliance from the start.
What happened during the 2026 Georgia legislative session?
Seven bills aimed at AI data centers were introduced in the 2026 session. SB 410, which would have paused the exemption and required new studies, passed the Senate on March 6, 2026 but died in the House. SB 408, SB 436, HB 559, and HB 1012 all failed to advance. No bill affecting the AI data center sales tax exemption became law. See Georgia Watch, Tax alert, O.C.G.A. § 48-8-3(68.1), SB 410, SB 408, SB 436, HB 559, HB 1012.
As a result, the exemption remains unchanged, available through December 31, 2031, with no new restrictions. A separate comprehensive tax reform bill, SB 476, which would have repealed both the (68) and (68.1) exemptions as part of broader income tax cuts, also did not pass in 2026. It could be reintroduced in 2027. See SB 476 as passed Senate, Georgia Legislature, Georgia Recorder, Session wrap-up.
Still, political pressure is real. A December 2025 UGA Carl Vinson Institute of Government audit estimated that the exemption forwent about $474 million in state tax revenue in fiscal year 2025, a net loss near $433 million after the revenue the covered projects returned, and it projected the forgone state revenue would climb to about $866.7 million by 2030. Broader tallies that count all data center tax breaks run far higher, with Good Jobs First citing state projections of roughly $2.5 billion in fiscal year 2026 and nearly $3 billion in fiscal year 2027. See Georgia Watch, Georgia Tax Expenditure Report, Good Jobs First. The audit also found that roughly 70 percent of AI data center construction activity would have occurred without the exemption. Bloomberg Tax
Local pushback has added to the tension. At least eight Georgia counties and cities, including Douglas County, passed moratoriums on AI data center development beginning in spring 2025. GPB News The Georgia Public Service Commission in December 2025 approved 9,885 megawatts of new generation capacity, about 80 percent of which is expected to serve AI data centers. Georgia Power agreed to financially backstop those costs through 2031 if AI data center contracts do not appear. Georgia PSC
So while the law did not change in 2026, the environment around it is shifting. A return to the issue in 2027 is widely expected.
Practical points for developers, counsel, and lenders
An exemption this large must be built into project underwriting and site selection from the start. Here are the points that matter most in practice.
- Choose the county tier deliberately. Many large projects naturally land in tier 1 (population above 50,000) where Atlanta and its surrounding counties sit. That requires $250 million and 25 jobs. A project in a tier 2 or 3 county can qualify with far lower thresholds, but those counties may have less available transmission capacity or more organized local opposition. The costs of that tradeoff must be weighed.
- Lock in the exemption start date as early as possible. An earlier start gives a longer runway for exempt purchases before the 2031 sunset. A project that breaks ground in 2027 will have only about four calendar years of tax free buying. That may be enough for a single phase, but phased campuses may need to accelerate delivery.
- Plan the equipment budget around the threshold and the clawback. The seven year spending target is a hard condition. Underbuying by even a small margin triggers full repayment of taxes, not a proportional penalty. Financing documents should account for the risk, and the developer should consider whether a surety bond is required and how to cover any gap between the bond and the full potential liability.
- Document job creation carefully. The jobs must be new to Georgia, not just new to the project. A developer that moves existing Georgia employees to the AI data center site may find those jobs do not count. Wage data must be benchmarked at the time each position is filled, and all of it must be reported annually.
- Compare the exemption with income tax credits. A project that expects large taxable income might prefer investment or job tax credits over the sales tax exemption. Running the numbers under both paths is a necessary step, especially now that amended returns can reclaim credits if the exemption is later revoked.
- Watch the 2027 legislative session. The sunset is meant to last through 2031, but a future session could curtail the exemption early. Developers with long lead time projects may want to accelerate equipment orders into 2026 and 2027 to capture the benefit under current law.
- Factor in local moratoriums and utility constraints. Even if the state exemption is available, a county may refuse zoning or a utility may lack capacity. The GreyStone Power experience, approximately 2 gigawatts of planned and contracted AI data center load in a single area, shows how concentrated demand can outrun local infrastructure. GreyStone Power The developer must coordinate the tax incentive with siting and power agreements.
Key takeaways
- Georgia exempts qualifying high-technology data center equipment from sales and use tax through December 31, 2031, after which the exemption sunsets.
- The threshold is three tiered by county population, namely $250 million / 25 jobs (counties over 50,000), $75 million / 10 jobs (30,001 to 50,000), and $25 million / 5 jobs (30,000 or fewer).
- The exemption covers a broad range of equipment, virtually everything inside the building except real property.
- A data center owner must apply for a certificate, may be required to post a bond up to $20 million, and must meet the spending and job thresholds within a seven year window or face full repayment of exempted taxes.
- Claiming the exemption rules out certain Georgia income tax credits for the same project, but those credits can be claimed later if the exemption is revoked and taxes repaid.
- The 2026 legislative session did not change the exemption, but political pressure remains high and the 2027 session may revisit it.
Frequently asked questions
Q:Does the Georgia AI data center sales tax exemption apply to AI data centers?
A:Yes. The exemption turns on physical infrastructure, not computing workload. The rule defines a high-technology data center as a facility developed to power, cool, secure, and connect computer equipment, so any AI data center, such as a training cluster, cloud region, or colocation hall, qualifies if it meets the investment and job thresholds. Rule 560-12-2-.117(2)(c)
Q:What is the last date I can buy equipment tax free?
A:December 31, 2031. No exempt purchases are allowed after that date because the law is repealed on January 1, 2032. O.C.G.A. § 48-8-3(68.1)(A), (H) All equipment must be delivered and accepted by then to avoid tax.
Q:What happens if we miss the spending threshold?
A:The data center must repay the full amount of sales and use tax that was exempted or refunded, plus interest at the rate set in O.C.G.A. § 48-2-40. Payment is due within 90 days of notice from the commissioner. No statute of limitations blocks the repayment. O.C.G.A. § 48-8-3(68.1)(C)(iii)(II)
Q:How many jobs do we need to create?
A:It depends on the county’s population from the most recent decennial census. For projects applying after May 9, 2022, the job requirement is 25 for counties over 50,000, 10 for counties between 30,001 and 50,000, and 5 for counties of 30,000 or fewer. O.C.G.A. § 48-8-3(68.1)(G)(v)(I)–(III)
Q:What equipment is covered by the exemption?
A:The exemption covers computer equipment plus a wide array of supporting systems, including generators, cooling, power distribution, batteries, cabling, routers, and more. Real property, meaning land, buildings, and fixtures, is excluded. O.C.G.A. § 48-8-3(68.1)(G)(iv) and Rule 560-12-2-.117(2)(i)
Q:Can we also claim Georgia income tax credits on the same project?
A:No. The sales tax exemption cannot be paired with the income tax credits listed in O.C.G.A. §§ 48-7-40 through 48-7-40.33 or § 36-62-5.1. If the Department determines the data center must repay the exempted taxes, the taxpayer may file amended income tax returns to claim those credits. O.C.G.A. § 48-8-3(68.1)(F) and Rule 560-12-2-.117
Q:Have any AI data centers actually received the exemption?
A:That is unclear. As of March 31, 2025, a report from CSG South stated that no AI data centers had applied for or received the exemption. The Department of Revenue could not release actual data for the December 2022 UGA audit because too few taxpayers had used it. CSG South and UGA audit The exemption may have been claimed since then, but public confirmation is lacking.
Q:How much can the surety bond be?
A:The commissioner may require a surety bond of up to $20 million. O.C.G.A. § 48-8-3(68.1)(C)(iv)(I) The actual amount is set case by case and is not a fixed sum.
Q:Is the exemption just for state sales tax, or does it include local tax too?
A:The exemption covers both state and local sales and use tax. O.C.G.A. § 48-8-3(68.1), Ga. Comp. R. & Regs. r. 560-12-2-.117 The total rate can reach 8.9 percent in parts of Fulton County.
Q:What changed during the 2026 legislative session?
A:Nothing changed. Multiple bills to pause or restrict the exemption were introduced but none became law. The exemption remains as is through its scheduled sunset on December 31, 2031. Georgia Watch
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Junde Liu, JD, LL.M. (Taxation) candidate at UF Law. Originally published on Compute Law Blog. This article is general information and does not constitute legal advice. Reading it does not create an attorney client relationship. The reader should not act on the basis of any content here without first consulting a licensed attorney in the relevant state. Last reviewed for accuracy May 23, 2026.