Alabama bill would limit data center tax breaks, requiring local investments for extensions

Alabama legislators have passed a bill that would limit tax breaks offered to data centers in the state, sending the measure to Governor Kay Ivey for final approval. The legislation would reduce the maximum exemption period for data center tax abatements from 30 years to 20 years while imposing new requirements for additional benefits. House Bill 399, proposed The legislation would also require data centers offering more than 100 megawatts of capacity to begin paying state non-educational property taxes and sales and construction taxes once a facility enters service. Currently, Alabama's data center exemptions can last up to 30 years without such investment requirements. Most of Alabama's data centers are clustered around its largest cities of Birmingham, Montgomery, and Huntsville. The state has seen growing interest from data center developers, but the industry expansion has generated local backlash that prompted the legislative response. One controversial project is Project Marvel, a proposed 1,600-acre data center campus set to be built just outside Birmingham in Bessemer. The project has attracted criticism since its announcement in March, highlighting tensions between economic development incentives and local fiscal concerns.