Clock Ticking on Data Center Incentive Proposal as Elections Loom

Governor candidates split on legislation that would provide sales tax breaks

Jan. 30, 2026 at 7:07pm

Got story updates? Submit your updates here. ›

With the race for governor on in South Dakota, state legislators are rushing to pass a bill this winter that would provide sales tax exemptions for large data centers before the next governor takes office. The proposal has divided the Republican candidates, with some supporting the incentives and others opposing them as corporate welfare. The issue could influence pending proposals to build multi-billion dollar data centers in the state.

Why it matters

The debate over data center incentives highlights the tension between attracting new technology investment and industry to the state versus concerns about the environmental impact and costs to existing utility customers. The outcome could shape South Dakota's economic development strategy for years to come.

The details

State Rep. Kent Roe, a Republican, is pushing a bill to give data centers a 50-year sales tax exemption on equipment and software purchases. He wants to pass it before the June primary election, fearing a new governor who opposes the incentives could take office. The bill excludes data centers used for cryptocurrency mining. Meanwhile, some candidates like U.S. Rep. Dusty Johnson support the incentives, while others like state House Speaker Jon Hansen oppose them as corporate welfare. Senators Taffy Howard and Chris Karr have proposed their own bills to regulate data centers, including restrictions on noise, water use, and protecting utility customers from rate hikes.

  • The 2026 legislative session ends in March, before the June primary election.
  • On January 5, 2026, the Sioux Falls City Council approved rezoning for a proposed $1.9 billion, 500-megawatt data center.

The players

Kent Roe

A Republican state representative who is pushing a bill to provide sales tax exemptions for large data centers in South Dakota.

Dusty Johnson

A U.S. Representative and Republican candidate for governor who supports incentives for data centers that meet certain qualifications.

Jon Hansen

The Republican state House Speaker who opposes providing tax incentives for data centers, calling it "corporate welfare".

Taffy Howard

A Republican state senator who has introduced bills to regulate data centers, including restrictions on noise and water use.

Chris Karr

The Republican state Senate President Pro Tempore who has unveiled a "Data Center Bill of Rights" to protect utility customers and local control.

Got photos? Submit your photos here. ›

What they’re saying

“With any potential administrative change, they're going to want to put their own stamp on the procedure and they're going to assert their authority.”

— Kent Roe, State Representative

“We need leaders willing to be the tip of the spear, charge forward, and bring that consensus into clarity, not wait for it to develop.”

— Dusty Johnson, U.S. Representative and Republican Gubernatorial Candidate

“Handing out taxpayer dollars to out-of-state corporations isn't pro-business; it's picking winners and losers at the expense of our own people.”

— Jon Hansen, Republican State House Speaker

What’s next

The judge in the case will decide on Tuesday whether or not to allow Walker Reed Quinn out on bail.

The takeaway

This case highlights growing concerns in the community about repeat offenders released on bail, raising questions about bail reform, public safety on SF streets, and if any special laws to govern autonomous vehicles in residential and commercial areas.