New Kentucky law lobbied by Google and Meta expands tax breaks for large data centers

FRANKFORT, Ky. (WDRB) -- Large data centers across Kentucky could qualify for tax breaks under a bill that passed the state legislature, expanding the subsidies beyond Louisville.

The provision was added to House Bill 775, a measure labeled a "Christmas tree" by one lawmaker for its scope that ranges from tax incentives for downtown Louisville development to levies on THC seltzers.

Gov. Andy Beshear allowed the bill to become law Thursday without his signature.

It lets data center projects recoup sales and use taxes on equipment they buy to run the sprawling, warehouse-type buildings that house computer servers, routers and other components needed to process large amounts of digital data.

The first such project was announced in January, when Louisville real estate firm Poe Companies and Virginia-based PowerHouse Data Centers revealed plans to build a campus on about 150 acres on Camp Ground Road near Shively.

Organizers previously told WDRB News that their decision was aided by legislation passed in 2024 that data centers in Louisville from paying sales and use taxes for 50 years — as long as a $450 million investment threshold is reached.

HB 775 broadens those 50-year tax breaks for projects of $450 million, allowing them in counties with more than 100,000 people. That would include Jefferson, Boone, Daviess, Fayette, Hardin, Kenton and Warren counties.

Similar benefits are proposed for investments of at least $100 million in counties with 50,000 to 100,000 residents; and $25 million in counties with less than 50,000 people. The exemptions would last for 25 years.

Senate President Robert Stivers, R-Manchester, who helped craft the legislation, said he's not aware of any imminent plans for other data centers. Google and Meta, which is building a large data center in Jeffersonville, Indiana, are the most high-profile companies that lobbied the bill, according to state records.

But Stivers said he believes the newly passed law will make Kentucky sites viable for developers.

"Hopefully when we look at it, it will be statewide," he told WDRB News in an interview, "and it will have, in my opinion, a great deal of impact on the state from multiple aspects," including making Kentucky a player in the fast-growing industry.

In February, WDRB investigated similar tax breaks and concerns in other states where public funds have been used to aid large projects.

A legislative committee in Virginia, where the data center industry has boomed, found in a research report issued last year that the main economic benefit comes during construction, although some areas have seen a surge in property tax revenue.

A common criticism of the centers is that they don't have large workforces. Another is that because data centers need ample land, energy and water, they're likely to choose certain geographic areas regardless of what incentives are available.

But Stivers disagrees with that argument. He said Kentucky would likely win out against states with higher energy costs, for instance, but those decisions become harder in places with similar natural resources. "Because of that, we have to compete with them," he said.

Poe Companies lobbied for the bill after advocating for the legislation that passed in 2024 that aids its Louisville project meant to lure a "hyperscale" developer – the small group of household names in cloud computing, the internet and artificial intelligence.

"We recognize that most, if not all, Hyperscale projects across the country are occurring in areas that offer similar incentives and see this as a real opportunity for the state as a whole," Poe President Hank Hillebrand said in a statement. "We are pursuing more projects in this industry across the region."

Meanwhile, the first plans were filed for the Camp Ground Road project with Metro government this week.

They call for 2.2 million square feet across seven buildings. As WDRB previously reported, there would be a switch yard and power substation for the electricity needed for the buildings. The land doesn't need to be rezoned.

Hillebrand said in January that the site represents an investment of "several billions of dollars."

There are no formal projections, but developers expect the data center will result in hundreds of full-time jobs and employ perhaps up to 1,000 construction workers while creating millions of dollars annually in property and other tax revenue for local and state coffers.