Subsidizing the rich, defunding the poor
Indiana grants data centers a 100% sales tax exemption on equipment and electricity under Indiana Code § 6-2.5-15. Because of this 100% statutory exemption, major companies like Amazon, Microsoft, Meta, and Google paid $0 in state sales tax on qualifying purchases and energy in 2025.
While state fiscal reports note that precise, consolidated figures on local property taxes are obscured by local data limitations, researchers and state fiscal offices estimate that total state and local abatements on electricity and server investments have climbed toward $150 million to $900 million annually across the state's pipeline.
The visualization below contrasts the estimated baseline sales taxes these companies would theoretically owe under Indiana's standard 7% tax rate versus the actual amount paid under the multi-decade exemption rules.
Tax Abatement vs. Paid Taxes (Estimated Projections)
Key Data Points Behind the Numbers
The 100% Tax Exemption: Indiana's Data Center Sales Tax Exemption waives the state’s 7% sales tax on both IT infrastructure (servers, routers) and electricity. For investments exceeding $750 million, this tax break is guaranteed for up to 50 years.
The Scale of Lost Revenue: According to the Indiana Office of Fiscal and Management Analysis, a group of seven major qualified projects accounted for $20.8 billion in planned investment, resulting in $150 million to $900 million in waived sales tax revenue.
Ongoing Utility Exemptions: Utility filings from companies like Indiana Michigan Power (I&M) note that a single massive AI data center can easily run up an annual electricity bill of $500 million. Under standard rules, this would generate $34.5 million in annual state tax revenue—meaning Indiana foregoes over $1.7 billion per giant data center over a 50-year horizon.
Recent Legislative Adjustments: Due to public concern over this $0 state tax reality, Governor Mike Braun signed a law to capture a tiny slice of revenue. Beginning mid-2026, newly approved data centers must pay a fee to local municipalities equivalent to 1% of their total sales tax savings on electricity, capping the payout at roughly $350,000 annually per facility to protect local communities.
Edit: Note to self- don’t post pic from cheap phone. Graph is supposed to show for 2025 no sales taxes were paid for data centers in Indiana. Republicans passed a law to give 50 year exemption to billionaire businesses resulting in a projected 150-900 million dollar loss in sales tax for the state. To appease the masses he brought back a 1% tax but it caps out at $350,000. Meanwhile Indiana has cut childcare, disability services, public health, environmental, and educational budgets. Socialism for the rich, capitalism for the poor.