Arizona Tax Advantages Can Mean Millions in Savings for Phoenix Data Center Clients

Quick take

  • High profile bids for big name tech companies get a lot of attention, but Arizona offers valuable tech incentives every day to companies of all sizes.
  • Arizona’s tax exemption can mean millions in savings for our Phoenix data center clients.
  • Download our new Phoenix Tax Exemption Insight Brief for more details about the benefits of Arizona data centers, including tax incentives worth millions.

When tech giant Amazon announced that it would be building a second headquarters – dubbed HQ2 – outside of Seattle, the race began for cities across North America. By the October 19th deadline, Amazon had received 238 very creative proposals. Tucson sent Amazon a saguaro cactus. Atlanta designated an area of town that would be renamed the city of Amazon. And dozens of cities began polishing packages of incentives; wherever HQ2 lands, Amazon is likely to receive billions of dollars in tax incentives.

High profile bids for big name tech companies like Amazon, or Apple, or Tesla, get a lot of press. And cities roll out the red carpet. But there are often incredible incentives available to businesses of much smaller scale as well. So it’s important for businesses of all sizes to understand the location’s ecosystem and to look for benefits and incentives that make sense for the business.

“Beyond #HQ2, cities and regions often offer incredible incentives to businesses of much smaller scale as well.” Click to Tweet

Tax benefits for data centers in Arizona

There are many reasons why Phoenix is one of the top ten multi-tenant data center markets in the U.S. They include the extremely low threat of a natural disaster. The lower-than-average cost of doing business. The low cost of power. The concentration of network providers.

And the tax advantages.

Our clients get a 20-year sales tax exemption on equipment purchases

In Arizona, qualified data center owners, operators, and clients are exempt from state, county and local sales taxes on purchases of data center equipment. That’s a sales tax exemption that can save a company millions over the life of a data center contract.

“20 year exemption from sales tax can be millions in savings for our colocation customers in Arizona.” Click to Tweet

A Data Center Dynamics article on Arizona’s tax benefits described them as “unlike many of the data center tax-incentive bills recently enacted by other states.” According to DCD, “Arizona’s legislation does not focus solely on big-name single-tenant data center operators, such as Google, Apple or Amazon. These tax breaks are meant to benefit both mega-scale single-tenant projects and companies that provide colocation services out of multi-tenant facilities.”

To see how the data center tax exemption could save you millions, download our Insight Brief

Insight Brief: Phoenix Tax Exemption

Other AZ tax advantages: accelerated depreciation on personal property

Arizona is also aggressively pro-business with its personal property tax policy. Property tax liability is calculated based on the real value of the property, an equalization factor, and the tax rate itself. In Arizona, the equalized rates are competitive, but the real advantage is in the hyper-accelerated depreciation policy under the Arizona Competitiveness Package, which reduces the taxable assessment by 75% in the first year.

Accelerated depreciation can ‘substantially reduce’ tax liability for IT equipment in the Phoenix data center. Click to Tweet

The additional depreciation can “substantially reduce” tax liability for IT equipment in the data center.  To see how much you could save, download our Insight Brief.

Insight Brief: Phoenix Tax Exemption

Bottom line

Overall, accelerated depreciation makes Arizona’s property tax environment competitive with other states. Add in the sales tax exemption available to Aligned’s Phoenix data center clients and the total savings can be many millions of dollars for a typical deployment.

And that’s not even counting the significant power cost savings associated with our guaranteed 1.15 PUE. And the cost deferment associated with our consumption-based pricing model. All because you’ve colocated with Aligned in Phoenix.

Learn more

Download the CXO Perspective Sheet here.