Indiana has been quietly handing out hundreds of millions of dollars in sales tax exemptions to data centers every year — and until recently, nobody outside the industry had a clear picture of how much.
An investigation by WTHR-TV in Indianapolis and watchdog group Good Jobs First forced the disclosure. What they found: Indiana is providing more than $655 million in sales and use tax exemptions for data centers across the state.
And $561 million of that — 86% of the total — goes to a single company.
Amazon.
The story of how Indiana ended up here is the same story playing out in Virginia, Ohio, Pennsylvania, and Georgia — just a few years earlier in the political cycle. And now that the number is public, Indiana's exemption is about to face the same scrutiny that has consumed state legislatures across the country in 2026.
Indiana passed its data center sales tax exemption in 2019. The legislation offered eligible data centers a significant sales tax break — facilities packed with state-of-the-art servers could avoid the state's 7% sales tax when purchasing equipment and power.
Indiana offers some of the country's most generous subsidies — including a sales tax exemption on energy and equipment for up to 50 years for data centers that invest more than $750 million.
50 years. That's not a typo. A data center that qualifies under Indiana's most generous tier can avoid paying Indiana's 7% sales tax on equipment and energy purchases for half a century.
The investment thresholds vary by population of the county where the data center is located — ranging from $25 million to $150 million in qualified investment over five years to qualify for the exemption. For hyperscalers like Amazon, Microsoft, and Google, those thresholds are easily cleared.
When the sales tax exemption was passed in 2019, lawmakers didn't anticipate that Big Tech companies would be building out large data centers — thus receiving billions of dollars in tax breaks. The AI boom sparked by the launch of OpenAI's ChatGPT in 2022 accelerated data center construction far beyond anything 2019 projections contemplated.
Sound familiar? It's exactly what happened in Virginia — where a $1.54 million annual projection grew to $1.6 billion. Indiana may be on the same trajectory.
The $655 million figure is significant — but it's explicitly not the full picture.
The more than $655 million figure covers state sales and use tax exemptions reported by data centers. It does not include local property tax abatements or all outstanding 2025 reports.
Indiana's Economic Development Corporation told investigators that some 2025 reports from data centers are still outstanding — meaning the total could grow beyond $655 million once all reporting is complete. And the figure doesn't include local property tax abatements, tax increment financing impacts, or other local incentives layered on top of the state exemption.
The reporting gap itself is a problem. Good Jobs First said it could not find a clear public price tag showing how much tax revenue Indiana was giving up through its data center tax exemption program — which is what prompted the investigation in the first place.
Under Indiana's law, the quasi-public Indiana Economic Development Corporation is responsible for collecting information about tax-abated investments at data center projects and reporting them to the state Comptroller. That arrangement created a transparency gap — the IEDC wasn't publishing the numbers publicly until investigative pressure forced the disclosure.
Here's the breakdown of Indiana's data center sales tax exemptions as disclosed:
Amazon — $561 million. That's 86% of the entire disclosed total going to a single company.
DX Hammond Opco, LLC — $28.4 million since 2022.
Blocke LLC — $12.3 million.
Hatchworks LLC — $2 million. After the award was granted, a state filing showed Hatchworks is a subsidiary of Google. A Google spokesperson said using a third-party LLC until project details are finalized is standard practice in economic development projects.
Two Digital Egg projects — roughly $1.4 million combined.
The LLC opacity issue is worth pausing on. In 2023, a company named Hatchworks applied for Indiana's sales tax exemption — and only after the award was granted did a state filing reveal it was actually Google. The practice of using third-party LLCs to obscure identity during the application process is standard across the industry — which means Indiana's publicly disclosed list of exemption recipients may not accurately reflect which ultimate corporate beneficiaries are receiving the breaks.
There's one notable exception in Indiana's data center landscape — and it's significant.
Microsoft announced in March 2026 that it would no longer be seeking local property tax abatements or breaks for their data center facility in La Porte.
Microsoft's voluntary decision to forgo property tax breaks — in a state where the exemption is available and where Amazon is taking full advantage — is unusual. Whether it reflects a broader corporate ESG positioning, a response to public scrutiny of data center subsidies, or a strategic decision specific to that facility isn't entirely clear.
But it does demonstrate that the exemption isn't mandatory — companies can choose to accept or decline it. And in a political environment where the size of these exemptions is increasingly in the public eye, Microsoft's move creates an interesting implicit pressure on other companies.
The most alarming detail in WTHR's investigation isn't the dollar amount. It's the transparency gap that allowed the number to grow to $655 million without lawmakers having a clear picture of what was happening.
The public needs to know how much money the state is losing, but also the lawmakers need to access this information to be able to make good fiscal decisions about the state budget, said Kasia Tarczynska, a senior research analyst with Good Jobs First.
That's a direct indictment of Indiana's disclosure framework. The state's fiscal decision-makers were voting on budget priorities without a complete picture of how much revenue they were giving away through data center exemptions. The IEDC was collecting the data — but it wasn't being published in a form that made the aggregate cost visible.
Virginia had the same problem. Its data center exemption was projected to cost $1.54 million per year in 2008. It cost $1.6 billion in 2025. The cost exploded not because anyone decided to dramatically expand the program — but because the AI and cloud computing boom drove investment far beyond anything that was modeled, while the transparency mechanisms that would have triggered a legislative review didn't exist or weren't being used.
Indiana is watching Virginia's story play out and now holding its own version of the same mirror.
At $655 million per year, Indiana is headed rapidly toward the dubious club of states already known to be losing more than $1 billion per year to data centers — Georgia, Ohio, Texas, and Virginia.
That club is going to grow. And the pattern is consistent across every member: exemptions created to attract an emerging industry, projections that dramatically underestimated the eventual cost, and a transparency gap that kept lawmakers in the dark until watchdog groups or investigative journalists forced the numbers into the open.
The states still in the dark — where exemption costs exist but haven't been publicly disclosed — include Alabama, Arkansas, Idaho, Iowa, Louisiana, Maryland, Missouri, Mississippi, North Dakota, Oklahoma, and Utah.
Every one of those states is potentially sitting on a number similar to Indiana's $655 million — or larger — without their legislatures having a clear picture of the cost.
Indiana's disclosure is the beginning of a political process — not the end of one.
Virginia's disclosure of its $1.6 billion cost led to a four-month legislative battle that ended with a new $600 million annual energy consumption tax. Ohio's disclosure is now fueling a bipartisan veto override attempt. Pennsylvania's disclosure is driving a House-passed digital advertising tax and bipartisan exemption repeal push.
Indiana's $655 million disclosure — forced by investigative journalism rather than voluntary government transparency — will almost certainly prompt legislative attention in the 2027 session. The question is whether Indiana follows Virginia's energy tax model, Ohio's repeal push, or a third path uniquely suited to its political environment.
Indiana's governor is a Republican. Its legislature is Republican-dominated. The political dynamics are different from Virginia's intra-Democratic fight. But the fiscal pressure is the same — and the "we didn't know how much it cost" defense is no longer available now that the number is public.
The framing that has gained the most traction among critics of data center exemptions is blunt — and worth understanding.
There was a giant transfer of wealth from taxpayers to shareholders, said Greg LeRoy, executive director of Good Jobs First. Some states, like Virginia, are headed toward billion-dollar annual losses.
The counterargument from the industry is equally direct. When lobbying for sales tax exemptions, advocates have said that data centers are a key driver of economic growth — pointing to jobs created, investment generated, and local tax revenue from sources not covered by the exemption.
In Indiana's case, the industry argues that the state is not writing companies a check — rather, the exemptions are part of a competitive framework designed to attract major investment that may not otherwise come to Indiana.
But Good Jobs First's position is that money not collected is still a public cost. A dollar of tax that isn't paid is a dollar that doesn't go to schools, roads, or public services — regardless of whether it shows up as a line item in the budget.
Both arguments are legitimate. The difference in 2026 — versus 2019 when Indiana's exemption passed — is that the cost is now quantified. And quantified costs invite scrutiny in ways that abstract projections never do.
For data center operators currently benefiting from Indiana's exemption, the disclosure doesn't change anything immediately. The exemption remains in place. The 7% state sales tax on qualifying equipment and energy purchases is still waived for qualifying facilities.
But the political environment has changed. The 2027 Indiana legislative session will almost certainly include proposals to modify, cap, or add new revenue requirements to the exemption — following the Virginia, Ohio, and Pennsylvania models. Operators who planned their Indiana investments around a 50-year exemption should be modeling what a Virginia-style energy consumption tax or an Ohio-style repeal of construction materials exemptions would mean for their long-term cost structure.
For businesses generally: Indiana's disclosure is a reminder that data center tax exemptions — and their costs — are being dragged into public view across the country. States that have been quiet about their exemption costs are facing increasing pressure from watchdog groups and investigative journalists to publish what Indiana just published under duress.
The era of invisible data center subsidies is ending. Whatever replaces them — modified exemptions, new consumption taxes, caps, conditions, or outright repeal — will shape the data center tax landscape for the next decade.
Operating a data center in Indiana or evaluating Indiana for future investment? Book a free consultation with our team at sales.tax. We'll help you understand your current exemption status, model the compliance implications of potential legislative changes, and prepare for whatever Indiana's 2027 session brings.