SB 526

 Session of 2026
                       SENATE BILL No. 526
                   By Committee on Assessment and Taxation
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1 AN ACT concerning data centers; relating to the sales tax exemption for
2   the construction or remodeling of a qualified data center; requiring any
3   such data center to be located on land that was zoned and classified for
4   industrial or manufacturing uses on July 1, 2025, if such land was
5   subject to zoning regulations by a local zoning authority on or before
6   such date; amending K.S.A. 2025 Supp. 74-50,331 and repealing the
7   existing section.
8
9 Be it enacted by the Legislature of the State of Kansas:
10     Section 1. K.S.A. 2025 Supp. 74-50,331 is hereby amended to read as
11 follows: 74-50,331. For purposes of K.S.A. 2025 Supp. 74-50,331 through
12 74-50,333, and amendments thereto:
13     (a) "Commencement of construction" means the date that
14 construction, reconstruction, enlargement or remodeling of a qualified data
15 center by a qualified firm commences, as determined in the agreement
16 required by K.S.A. 2025 Supp. 74-50,332, and amendments thereto.
17     (b) "Commencement of operations" means the date that the qualified
18 firm commences operations at a qualified data center, as determined in the
19 agreement required by K.S.A. 2025 Supp. 74-50,332, and amendments
20 thereto.
21     (c) "Data center equipment" means equipment or software purchased
22 or leased for the processing, storage, retrieval or communication of data,
23 regardless of whether the property is or is not affixed to or incorporated
24 into real property, including the following:
25     (1) Servers, routers and connections and computer equipment,
26 monitoring and security equipment or systems;
27     (2) equipment used in the operation of the qualified data center,
28 including, but not limited to, backup generators, component parts,
29 installations, refreshments, replacements and upgrades;
30     (3) all equipment necessary to cool and maintain a controlled
31 environment for the operation of the computer servers and other
32 components of the qualified data center, including, but not limited to,
33 chillers, mechanical equipment, refrigerant piping, fuel piping and storage,
34 adiabatic and free cooling systems, cooling towers, water softeners, air
35 handling units, indoor direct exchange units, fans, ducting and filters;
36     (4) all water conservation systems, including facilities or mechanisms
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1 that are designed to collect, conserve and reuse water;
2     (5) all computer server equipment, chassis, networking equipment,
3 switches, racks, fiber optic and copper cabling, trays and conduit;
4     (6) all conduit, ducting and fiber optic and copper cabling directly
5 related to connecting one or more distributed qualified data center
6 locations regardless of whether located inside or outside a data center;
7     (7) all software; and
8     (8) other personal property that is essential to the operations of a
9 qualified data center, excluding such property used in the administration of
10 the qualified data center.
11     (d) "Department" means the department of commerce.
12     (e) (1) "Eligible data center costs" means expenditures for the
13 development, acquisition, construction and operation of a qualified data
14 center by a qualified firm, including, but not limited to, costs of land,
15 buildings, site improvements, data center equipment, data center
16 equipment acquisition and permitting, lease payments, site characterization
17 and assessment, engineering and design used directly and exclusively for a
18 qualified data center.
19     (2) "Eligible data center costs" does not include the cost of electricity.
20     (f) "New jobs" means newly created jobs with a qualified firm at a
21 qualified data center or directly associated with a qualified data center
22 filled by Kansas residents and the primary work locations of such jobs are
23 in Kansas.
24     (g) "Qualified data center" means one or more buildings that are:
25     (1) Constructed, reconstructed, enlarged, remodeled or leased to
26 house a group of networked computer servers in this state to centralize the
27 storage, management and dissemination of data and information pertaining
28 to a particular business, taxonomy or body of knowledge and such
29 buildings are connected to each other by fiber and associated equipment
30 required for operating a fiber transmission network between data center
31 buildings and internet points for the purpose of providing redundancy and
32 resiliency for the data center services provided in each building; and
33     (2) located on land that was zoned and classified for industrial or
34 manufacturing uses on July 1, 2025, by a local zoning authority. This
35 paragraph shall only apply to land that was zoned and classified for
36 particular uses on or before July 1, 2025, by a local zoning authority.
37     (h) "Qualified firm" means a business or an affiliate thereof that is
38 registered with the secretary of state and is engaged in the development,
39 operation or leasing of a qualified data center. "Qualified firm" does not
40 include a telecommunications carrier or local exchange carrier as defined
41 in K.S.A. 66-1,187, and amendments thereto, electing carrier as defined in
42 K.S.A. 66-2005(x), and amendments thereto, wireless services provider as
43 defined in K.S.A. 66-2019, and amendments thereto, or video service
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1 provider as defined in K.S.A. 12-2022, and amendments thereto.
2    (i) "Secretary" means the secretary of commerce.
3    Sec. 2. K.S.A. 2025 Supp. 74-50,331 is hereby repealed.
4    Sec. 3. This act shall take effect and be in force from and after its
5 publication in the statute book.