Data Center Tax Incentives Series: Washington State



In 2010, the State of Washington passed data center sales and use tax legislation that resulted in a flurry of data center activity within the state. The state was able to land data center commitments from companies such as Microsoft and Yahoo. These tax incentives expired in July of 2011 and, as a result, corporate data center development shifted to Oregon.

Subsequently, the State of Washington passed Senate Bill 6635, wherein they renewed and amended the previous legislation, and expressed their intentions for data center legislation as follows:

It is the legislature’s intent to encourage immediate investments in technology facilities that can provide an economic stimulus, sustain long-term jobs that provide living wages, and help build the digital infrastructure that can enable the state to be competitive for additional technology investment and jobs.

New Additions

The new bill amended the 2010 legislation to include “and to qualifying (data center) tenants” in its sales and use tax exemption language.


  • Within six years of being approved for tax incentives, the qualifying business or tenant must show a minimum increase in net employment to be as follows:
    • Thirty-five (35) family wage employment positions; or
    • Three family wage employment positions per 20,000 SF of space (or less) that is newly dedicated to housing working server equipment;
    • Additional clarification is provided in determining the qualifications for a family wage employment position, and how to count them for purposes of meeting the tax exemption requirements.
  • The Data Center must be located in a rural county as defined by RCW 82.14.370
  • Commencement of construction must be between March 31, 2010 and July 1, 2011; or between March 31,2012 and July 1, 2015
  • Sales and use tax exemption is to include qualifying equipment, and the labor costs associated with the installation, repair, alterations, or improvements of said equipment


For a downloadable copy of the report, please click here.

To read the full Washington State legislation, please click here.


About Five 9s Digital, LLC

Five 9s Digital is a data center real estate company offering data center development, investment sales, real estate advisory, and colocation and wholesale data center selection and procurement services. Five 9s Digital has been involved in the development and ownership of multiple mission critical facilities from single user build-to-suit facilities to multi-tenant data centers. Five 9s Digital brings a wealth of experience, background and expertise in providing solutions to the data center arena. Due to the specific and yet evolving requirements of mission critical end users in today’s world, Five 9s Digital is able to offer real solutions, real facilities, and real choices due its extensive and up-to-date knowledge base. Five 9s Digital is a Best Data Sites Certification Alliance™ member.
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