Senate Bill 265 Alabama 2026 Session

Summary

Primary Sponsor

Andrew JonesSenator

Republican

Session

2026 Regular Session

Title

Tax abatements for data processing centers, exemption period limited, collection of certain taxes on purchases required, sunset date extended

Summary

SB265 tightens Alabama's data processing center incentives by capping abatements at 20 years from 2027, starts collecting state sales/use taxes from large centers, and extends the sunset for these incentives while expanding definitions and funding rules.

What This Bill Does

If enacted, the bill would cap data processing center abatements at a maximum of 20 years starting January 1, 2027, with a tiered structure based on private investment (up to 10 years for smaller investments, up to 20 or 30 years for larger investments and depending on timing). It would require certain large data processing centers to pay state sales and use taxes on purchases beginning January 1, 2027 and specify how the resulting tax proceeds are distributed to programs such as education, welfare, and parks, among others. It would also extend the sunset date for abatements, broaden the definition of qualifying industrial or research enterprises to include data processing centers, and set energy/size thresholds (e.g., 100 MW) that affect abatements and related terms.

Who It Affects

• Data processing centers and their private owners/operators: they would face a 20-year (or tiered) cap on abatements beginning in 2027 and would be responsible for new state sales/use taxes on eligible purchases, potentially altering the financial benefits they receive from incentives.
• State and local governments and the public: more tax revenue from large centers would be diverted to designated funds (e.g., Education Trust Fund, welfare programs, parks) and counties, with funding priorities and sunset periods adjusted accordingly.

Key Provisions

• Provision 1: Maximum exemption period for data processing center abatements is limited to 20 years from the date of ownership or bond issuance for abatements granted on/after January 1, 2027, with a tiered structure (10, 20, or 30 years) based on the center's total private investment and timing of the abatement.
• Provision 2: Beginning January 1, 2027, large data processing centers must pay state sales and use taxes on purchases, and the proceeds will be distributed to specified state and local funds (including education, welfare, and parks); incentives under Act 2012-210 are not available to new applications filed after July 31, 2028 (2032 in the text), while existing project agreements may remain.

AI-generated summary using openai/gpt-5-nano on Feb 12, 2026. May contain errors — refer to the official bill text for accuracy.

Subjects

Taxation & Revenue