Florida's Data Center Policy Evolution
- Policy & Regulation
- Mar 14
- 4 min read
Updated: May 18
Florida policymakers are beginning to confront the rapid expansion of artificial intelligence infrastructure. Massive data centers require extraordinary amounts of electricity, water, and land, prompting states across the country to revisit how such facilities are regulated, taxed, and integrated into regional power grids.
Despite periodic claims that America is falling behind in digital infrastructure development, the reality is quite the opposite: the United States continues to dominate globally in the deployment and operation of large-scale data center capacity.
Florida Data Center Policy
Companies building or operating hyperscale data centers should expect a growing patchwork of state regulatory frameworks addressing electricity costs, water consumption, local zoning authority, and ratepayer protections.
Global demand for data-center capacity is expected to triple by 2030, with U.S. capacity growing roughly 20–25 percent annually as artificial intelligence infrastructure expands. Florida is playing an increasingly important role in this ecosystem.
As demand for computing power continues to accelerate—particularly due to artificial intelligence—states across the country are reevaluating how to attract data-center investment while ensuring that energy infrastructure and local communities are protected.
In Florida, that policy conversation has unfolded over nearly a decade of Tallahassee lobbying and legislative activity. What began as one of many pro-growth tax incentives championed by Governor Rick Scott—designed to attract technology infrastructure investment during the worst recession in modern era—gradually evolved into a broader policy discussion involving:
The 2026 Florida Legislature’s data center legislation represents the latest step in that policy evolution.
2017 — Creating the Data Center Tax Incentive
Florida’s policy framework for data center development began in 2017, when the Legislature enacted a targeted sales-and-use tax exemption designed to attract large-scale digital infrastructure investment.
Effective July 1, 2017, the law allowed eligible data centers to avoid paying Florida’s 6 percent state sales tax, along with applicable local taxes, on certain purchases required to construct and operate their facilities.
The measure positioned Florida as a competitive destination at a time when states across the country were aggressively courting cloud computing and digital infrastructure investment.
Incentive Eligibility Thresholds
To qualify, data centers were required to meet several benchmarks within five years of commencing construction:
$150 million or more in cumulative capital investment
critical IT load of at least 15 megawatts
minimum 1 megawatt per tenant
These thresholds ensured the program targeted large-scale facilities capable of generating meaningful economic activity.
Qualified Purchases—the exemption applied to infrastructure necessary to construct and operate data centers, including:
computer hardware and servers
machinery used in facility operations
electricity consumed by the data center
The 2017 incentive—associated with HB 1277—reflected Florida’s broader strategy to encourage high-technology infrastructure investment and position the state as a destination for major technology companies.
2025 — Florida Narrows the Data Center Incentive
On June 30, 2025, the Legislature passed HB 7031. Beginning August 1, 2025, only data centers with a critical IT load of 100 megawatts or greater remain eligible for the exemption—a dramatic increase from the previous 15-megawatt threshold. Under the revised law data centers below the 100-MW threshold—whether newly proposed or already operating—no longer qualify for the tax exemption.
This change effectively limited the incentive to very large hyperscale facilities, removing the benefit from smaller or mid-sized projects.
Rising Energy Demand and Legislative Response
Modern hyperscale data centers—particularly those supporting artificial intelligence training and high-performance computing—require enormous and continuous power loads, often comparable to those of small cities.
As interest in locating new facilities in Florida increased, policymakers began asking how the cost of building new energy infrastructure should be allocated.
2026 Data Center Legislation
The legislation establishes a framework addressing the intersection of artificial intelligence infrastructure, energy demand, and ratepayer protection:
Utility Ratepayer Protection: A central provision ensures that data center developers bear the costs associated with the infrastructure required to serve their facilities. This is intended to prevent residential electricity customers from subsidizing large computing operations.
Transparency and Non-Disclosure Agreements: The legislation permits non-disclosure agreements (NDAs) allowing certain development details to remain confidential for up to one year. These provisions were modified during final legislative negotiations.
Preservation of Local Government Authority: Local governments retain authority to regulate data center siting through zoning and comprehensive planning processes. Cities and counties therefore maintain oversight over where such facilities may be located.
Statewide Impact Study: The legislation also directs the state to conduct a comprehensive study examining the economic, infrastructure, and energy impacts of data center development in Florida. The study must be completed by July 1, 2027.
Awaiting the Governor’s Decision
If enacted, the measure will represent Florida’s most significant statutory step to date addressing the intersection of:
The legislation marks a clear shift in Florida’s policy approach—from simply incentivizing digital infrastructure investment to actively managing the energy and infrastructure consequences of hyperscale computing.
