Bill Description: House Bill 609 would limit the scope of state tax incentives for new data centers in Idaho. 

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NOTE: House Bill 609 deals with 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 609 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 609 would amend Section 63-3622VV, Idaho Code, to add a sunset date of July 1, 2036, and to limit the sales tax incentive to “the purchase or use of eligible server equipment,” removing its applicability to “new data center facilities.”

It would also amend the definition of what businesses could qualify for the credit by requiring that, after March 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” and provide “written notice to the local water provider serving such proposed data center's location 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 add a new subsection (and amend Section 63-4502, Idaho Code) to clarify that a business can claim either the data center sales tax exemption or the property tax exemption for net taxable value over $400 million with a new capital investment of at least $1 billion, not both. 

While repealing these cronyistic provisions would be a preferable solution, this bill does take steps to reduce the negative fiscal impact these incentives can have on general taxpayers.

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