Arizona 3-year data center tax exemption pause
Arizona HB 4168 — 3-Year Pause on New Data Center Sales/Use Tax Exemptions (Laws 2026, Ch. 140)
Arizona · Ariz. Laws 2026, Ch. 140 (HB 4168 / SB 1861, signed June 13, 2026, eff. July 1, 2026)
- Status
- In effect
- Took effect
- July 1, 2026
- Applies to
- Arizona Commerce Authority (cannot accept applications or issue new certifications during pause period); data center developers seeking new ACA tax certifications
- Enforced by
- Arizona Department of Revenue; Arizona Commerce Authority
Arizona's 2026 budget law (HB 4168, Laws 2026 Ch. 140) pauses the state's data center sales and use tax exemption for three years. From July 1, 2026 through June 30, 2029, the Arizona Commerce Authority cannot accept any new applications for the exemption, and no new data center qualifies for this tax relief. Existing certifications that were already awarded remain valid — the law only blocks new ones. The pause is expected to save the state roughly $38 million per year. Governor Hobbs had initially asked to eliminate the tax exemption entirely; the three-year pause was the bipartisan compromise reached during budget negotiations.
Who is protected: Arizona taxpayers and ratepayers from unfettered data-center tax subsidies during a period of rapid data-center development and grid/water stress
Legal detail
AZ Laws 2026, Ch. 140 (HB 4168 / SB 1861, budget omnibus bill, signed June 13, 2026): amends the Arizona data center sales and use tax exemption statute (A.R.S. § 42-5159 and associated ACA certification provisions) to prohibit the Arizona Commerce Authority from accepting new applications or granting new certifications for the data center tax relief program from July 1, 2026 through June 30, 2029. Existing certified facilities retain their exemption throughout this period; the pause is prospective only. No construction moratorium — only the tax incentive is paused. Estimated fiscal impact: ~$38M/year in increased state revenues. The measure was negotiated as part of the overall state budget and received bipartisan support. Note: this is a fiscal/economic incentive pause; it does not prohibit data center construction or operation. Governor Hobbs signed as part of the overall budget signing ceremony (azgovernor.gov, June 2026 pool footage).
Key facts
| Jurisdiction | Arizona |
|---|---|
| Level | State |
| Strength | Limited |
| Enacted | June 13, 2026 |
| Citation | Ariz. Laws 2026, Ch. 140 (HB 4168 / SB 1861, signed June 13, 2026, eff. July 1, 2026) |
| Private right of action | No, agency enforcement only |
| Penalties | New certifications issued during pause period would be invalid; fiscal enforcement through state revenue administration |
| Topics | data-center siting and energy |
| News report | Arizona budget deal includes 3-year pause on data center tax exemptions — AZ Family / CBS5 AZ |
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Related data-center siting and energy rules elsewhere
- Superior WI Data Center Moratorium (1-year) · In effect
- Dane County WI Hyperscale Data Center Moratorium · In effect
- Madison WI Data Center Moratorium (1-year) · In effect
- Manitowoc County WI Data Center Moratorium · In effect
- WA SB 5982 (Data Center / Clean Energy) · In effect
- Dayton OH data center moratorium (180-day, Apr 2026) · In effect
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