LANSING, Mich. (News 10) - State Sen. Jim Runestad plans to introduce legislation that would repeal the sales and use tax exemptions granted to data center developments in Michigan law.
The legislation that granted data center developers those exemptions was introduced in 2023 and approved by the governor on the last day of 2024.
Those same tax breaks, in part, allowed the Stargate data center run by OpenAI, Oracle, and Related Digital to come to Saline Township.
House Bill 4096, one of two bills that Sen. Runestad is aiming to repeal along with Senate Bill 237, allows “a sale of data center equipment to the owner or operator of a qualifies data center,” or sale of data center equipment is exempt from the tax.
The bill also prohibits the Michigan strategic fund, which is controlled by the Michigan Economc Development Corporation (MEDC), from disclosing any information that is “not aggregated or any information that could be used to identify a specific person or data center.”
“Why is the state underwriting these multi-billion dollar corporations that have unlimited money to build these data centers?” Runestad said.
The senator says the corporations developing data centers across the state “just want the additional money,” and doubts, without the breaks, won’t continue to develop in Michigan.
Senator Runestad’s bill also wants to repeal what information is disclosed to the public.
“Part of that bill that put all these tax credits together also said ‘we can’t give you any information, how much tax credits are they getting, how much stuff was buried in the bill to hide any of this information from the taxpayer,’” Runestad said.
“The corruption is off the charts. Why is it off the charts? The same reason always, money,” Runestad.
Representative Joey Andrews, D-St. Joseph, who sponsored House Bill 4096, said keeping information from the public was done mainly done to protect trade secrets and national security.
“You can glean quite a bit from what these projects look like based on what they’re spending money on, how much they’re spending, when they spend it,” Andrews said. “We don’t want China or another enemy country learning a little bit too much with how we do these things.”
Andrews also says the legislature built his bill off of the already existing colocation tax credit, which had the language in it as well.
Andrews said if Runestad’s bill were signed into law, it would put a chilling effect on data center development, something he called the “21st century industrial revolution.”
“It would send a signal, not just to data centers developers, but developers broadly that Michigan can’t make up its mind. That we pass a law and then two years later we repeal it. That sends a really bad message to economic developers in general, to big corporations that might want to come to Michigan,” Andrews said.
Mike Alaimo, Vice President of Legislative and External Affairs for the Michigan Chamber of Commerce, says hyperscale data centers provide a “massive opportunity” for the state. Alaimo cites significant new investment into a state that is “in dire need of it.”
He says data centers are a tool that would help in turning Michigan around, and repealing incentives for developers would show corporations that Michigan “is not open for business.”
Alaimo says more can be done in regard to transparancy, but says other states have shown to “do a much worse job” than Michigan.
“[Other states] have seen things, like, massive energy rate spikes because they didn’t put key protections in place,” he said. “Michigan’s in a position to see significant downward pressure on energy rates because of the requirement we have.”
Andrews said his original bill was “overly restrictive.” His office is currently working on a new bill that could allow more information disclosure about tax breaks offered to data centers.
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https://www.wilx.com/2026/09/02/data-center-tax-breaks-could-falter-if-state-legislation-is-passed/