HB 897: Tax Accountability for Data Centers (2026)
Summary: Revises Idaho’s data center tax incentives by limiting the sales tax exemption for new facilities to server equipment, phasing out eligibility for the large capital investment property tax exemption, and adding new requirements related to utility cost recovery and water use notification. The bill also establishes reporting requirements on economic, energy, and water impacts. Overall, it narrows incentives while increasing transparency around the impacts of data centers.
ICL’s Position: Support
Current Bill Status: House Floor
Issue Areas: Data centers, Energy, Water
Bill Sponsors: Rep. Chris Bruce (R-District 23), Sen. Lori Den Hartog (R-District 22), Rep. John Gannon (D-District 17)
House Bill 897 represents a measured step toward reforming Idaho’s data center incentive structure by reducing the scope of tax subsidies and increasing transparency around their impacts. By limiting the sales tax exemption for new data centers to server equipment and phasing out eligibility for the large capital investment property tax exemption, the bill reduces the overall level of public subsidy for these highly resource-intensive facilities. It also requires new data centers to take electric service under cost-recovery rate structures and to provide advance notice of water use, while directing the state to report on tax expenditures, energy consumption, and water impacts over time.
These changes help address growing concerns about the strain data centers can place on energy systems and water resources, as well as the potential for cost shifting to other ratepayers. Increased reporting requirements are particularly valuable for informing future policy decisions.
This bill is a step in the right direction, while recognizing that it does not establish enforceable standards for energy efficiency, water conservation, or environmental protection. The bill improves accountability and reduces incentives, but additional policy measures may be needed to fully address long-term environmental and resource impacts associated with large-scale data center development.
