Companies May Use Tax Incentives And Energy Savings To Cut Costs

May 16, 2016/0 Comments

Keeping costs down is an important move to make when running a business, especially as the quarter ends and tax season is in full swing. As companies begin to file, IT professionals are taking advantage of several tax incentives being offered by the government. They are also looking for ways to cut costs through energy efficiency and other savings. Data centers are not cheap to operate, so it is important to do whatever it takes to keep the savings up and the costs down.

One of the ways to choose a data center for a client is to consider tax incentives. To put it into perspective, say for example a customer is spending around $200,000 in costs for IT equipment for each cabinet, such as servers, storage, etc. Add on top of that a 9% sales tax, and the company is looking at 18 grand in taxes on top of the 200k. A large data center, with 100 cabinets would cost them 1.8 million in taxes alone.

Companies May Use Tax Incentives And Energy Savings To Cut Costs

Some States Offer Incentives

For example, some states such as Minnesota offer incentives to data centers such as eliminating sales tax on IT equipment. If a company opens up a data center of at least 25,000 feet and invests $30 million in the first four years of operations, they qualify for exemptions in personal property tax, and sales tax exemptions for 20 years. They also will not tax personal property, utilities, internet access, and other IT related goods and services. This can easily save 30% for your clients.

Nevada has also enacted a savings program that will offer abatement on certain taxes, such as personal, sales and property. This abatement can result in significant reductions in sales tax, dropping it to 2%, which is huge savings for the company’s bottom line. Nevada offers a nearly unlimited source of electricity at very competitive rates when compared to the rest of the country.

They also boast a very reliable power grid, meaning uptime on these data centers would be exceptional. Nevada is also home to one of the best fiber pipelines in the country.

Oregon has some of the lowest business taxes in the country. They also have zero sales tax, and has business zones that offer several different tax abatement programs. Finally, looking at Oregon’s energy costs, they are significantly lower than other parts of the country, especially in California, which is extremely expensive. This leads to extremely high savings for the company.

Opening a new data center means not only an investment for the company, but an investment for the state that it is opened in. These states know that technology is one of the biggest job creators in the world, so keeping those jobs in their state is a high priority. Taking the time to look at different areas and seeing what kind of savings they are willing to offer can keep a lot of money in your clients pockets.

Keeping costs down is an important move to make when running a business, especially as the quarter ends and tax season is in full swing.

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