Colorado is proposing HB26-1030 to tie new data center tax breaks to stricter climate and efficiency requirements.
The bill would give 100% state sales and use tax exemptions for certified data centers that meet energy efficiency standards and use water-efficient or closed-loop cooling.
Lawmakers are positioning this as a way to attract data center investment, including AI and GPU-heavy builds, while keeping growth aligned with state climate goals and local resource constraints.
Flexential’s CEO argues the bill isn’t favorable to the data center industry and stresses that operators already fund their own substations and, in some designs, run at effectively zero water use.
The real tension here is over who controls the power and water narrative: operators touting self-funded infrastructure versus policymakers prioritizing statewide grid and water planning as AI loads surge.
For AI infra planners, this is another signal that tax incentives will increasingly come with operational guardrails on efficiency, cooling technology, and environmental reporting.
Worth a read if you’re siting GPU capacity or designing cooling and power strategies in regulated or resource-constrained states.
Source: Proposed Colorado bill aims to balance data center growth with climate goals
