Sen. Grohoski champions new Maine law excluding data centers from tax exemption programs

Posted: April 27, 2026 | Senator Grohoski

AUGUSTA — On Thursday, April 23, LD 713, presented by Sen. Nicole Grohoski, D-Ellsworth, was signed into law. As amended and newly titled, “An Act to Exclude Data Centers from the Business Equipment Tax Exemption and the Dirigo Business Incentives Program and to Require the Department of Economic and Community Development to Study Financial Incentives for Data Centers,” LD 713 defines data centers and excludes them from the Business Equipment Tax Exemption (BETE) and the Dirigo Business Incentive Program.

“This new law prevents data centers from taking advantage of broad-based business incentive programs that were designed with long-term, good-paying jobs in mind,” said Sen. Grohoski. “BETE and Dirigo were not designed with data centers in mind. We should not apply them by default while we take stock of what benefits data centers actually deliver and if or how we want to incentivize them. If data centers belong in our conversations about economic development, then let’s make that case deliberately and design something that works for Maine people, Maine communities and Maine’s fiscal future.”

LD 713 accomplishes the following:

  • Defines data centers.
  • Excludes them from the BETE and Dirigo business incentive programs.
  • Directs the Department of Economic and Community Development (DECD) to analyze what other incentives, such as Tax Increment Financing (TIF) or economic development grants, data centers may benefit from (under current State law). DECD will produce a study and report back by Nov. 4, 2026, giving the 133rd Legislature the opportunity to act on potential legislation.

The BETE program exempts most business equipment from property taxation. When BETE applies, the State reimburses municipalities for only 50% of the foregone property tax revenue. A town or city that hosts a large data center and bears the real costs of infrastructure, emergency services and community impact never sees the full fiscal benefit of that investment due to the BETE program.

The costs of tax exemptions for data centers have escalated far beyond initial projections in states that moved quickly to incentive their development. Texas surpassed $1 billion in foregone revenue in fiscal year 2025, up from an original estimate of $130 million. Georgia saw its exemption costs jump from $10 million to $625 million in just a few years. Foregone revenue in Illinois went from $10 million to $370 million in the first four years of its programs.

According to testimony from Amanda Campbell with the Maine Municipal Association, “Municipal officials have consistently identified the erosion of the property tax base as a key driver in property tax increases. Exemptions of any kind create winners and losers and simply shift the property tax burden of exempted properties onto the entire tax base – including those who benefit from the exemption.”

Further on, Campbell noted, “Regardless of the group providing the study and subsequent data, municipal officials implore the researchers and this committee to consider the implications and consequences of continuing to erode the property tax base and if tax incentives, when weighed against the cost to the property taxpayers, truly provide the intended benefit.”

As non-emergency legislation, LD 713 will take effect 90 days after the Legislature adjourns.

###