Who benefits from the taxes generated by Wyoming’s booming data center industry, and who decides how that money is divided?
Those are the questions Sen. Cale Case, R-Lander, raised Wednesday during an interview on the “Cowboy State Daily Show” with Jake Nichols.
“Are we getting enough taxes from these things, and where do those taxes go?” he asked.
Case spoke from Milwaukee, where he's attending a U.S. Department of Energy conference focused on protecting the nation’s electrical grid from cyber threats.
A Growing Industry, And Growing Questions
Over the past decade, Wyoming has drawn increasing interest from data center developers, with a surge of projects in Cheyenne in particular.
The state’s cool, dry climate and business-friendly policies make it an attractive place to house large server operations.
Companies and local leaders point to the economic benefits of being a national hub for artificial intelligence and data center growth.
Cheyenne LEADS, an economic development entity for the city and Laramie County, tax revenues tied to data centers support schools, infrastructure and other public services.
As the industry expands, however, so do concerns about how much the industry impacts resources and contributes to the state and local communities — and how those contributions are shared.
The Role Of Tax Exemptions
A key incentive for data centers coming to Wyoming is the state's manufacturing sales and use tax exemption, which applies to machinery used directly in production, as well as fuel and power consumed in the process, officials say.
Cheyenne LEADS CEO Betsey Hale said data centers are not coming to Wyoming strictly because of the exemptions.
However, she said, “If the exemptions went away, they would not come.”
“If we eliminate the sales and use tax exemption, we won’t see future development of data centers,” Hale told Cowboy State Daily.
That would be unfortunate for Wyoming, she added.
Per the exemption, data centers in Wyoming don’t pay sales tax on their servers for three years.
Case pointed out that data centers replace their servers every three to four years, which means that, "They’re making enormous purchases and paying no sales tax."
Legislation passed in 2025 extended this exemption, which was set to expire in 2027, ensuring it remains active through 2042.
Where The Tax Money Comes From
While data centers are exempt from some taxes, they do pay sales tax on electricity, a major cost for facilities that run around the clock.
Case said that revenue stream is substantial and unevenly distributed.
He reiterated Wednesday that the Legislature is beginning to look at ways to change how sales tax is distributed.
“Very large amounts of sales tax shouldn’t be just distributed the old way between local governments and the state,” he said. “We should use these monies to fund the local governments that aren’t sharing in this bonanza.”
Case said he has proposed using the sales tax money earned on electricity that data centers buy to fund local governments across the state that lack revenue opportunities.
Currently, Wyoming distributes more than $100 million annually to local governments that lack strong revenue sources.
Possible Changes Ahead
Cowboy State Daily previously reported that the Wyoming Legislature plans to consider changes to sales taxes on electricity. That tax has been lucrative for Cheyenne, where data centers are being built at a blistering pace.
“We’re going to put a gross receipts tax on electricity eventually,” Case told Cowboy State Daily earlier this year.
The gross receipts tax is being seen as one way to restore equity in the energy sector and would ensure all players are contributing a fair share to state tax revenue, he said.
If the change to the tax structure happens, it could change the equation on whether data centers are as economically beneficial to Wyoming communities, Case has said.
The scale of energy use alone is striking.
“One data center uses almost twice as much electricity as the entire state of Wyoming,” Case said. “That’s astounding.”
Why Cheyenne?
Much of Wyoming’s data center growth has centered in Cheyenne, a city Case described as “sprawling by Wyoming standards,” with ample land available for development.
Areas once dominated by agriculture are increasingly being converted to industrial use, reflecting a broader shift in how land, and economic opportunity, is evolving in the state.
Hale said she hopes lawmakers recognize that the same incentives drawing development to Cheyenne could also help bring investment to more rural parts of Wyoming.
Whether that happens — and how the tax benefits are ultimately shared — remains an open question as the industry continues to expand.
Kate Meadows can be reached at kate@cowboystatedaily.com.
