The Montana Legislature has introduced Senate Bill 540, a significant piece of legislation aimed at incentivizing the establishment and expansion of data centers within the state. Introduced on March 29, 2025, the bill outlines specific criteria for what constitutes a "qualified data center" and proposes tax classifications that could have substantial economic implications.

The primary purpose of Senate Bill 540 is to attract investment in data centers by offering favorable tax treatment. To qualify, a data center must either cover at least 300,000 square feet with a total investment of at least $150 million, or encompass 25,000 square feet with a minimum investment of $50 million over a 48-month period. The bill specifies that construction must commence after certain dates, ensuring that only new projects benefit from these incentives.

Key provisions of the bill include the classification of property associated with qualified data centers as "class seventeen property," which allows for a lower tax rate. This classification extends to local dedicated communications infrastructure, which is crucial for the operation of data centers. The bill also outlines the types of infrastructure that qualify, including cooling systems and power management facilities, which are essential for maintaining data center operations.

Debate surrounding Senate Bill 540 has focused on its potential economic impact versus concerns about tax revenue loss for local governments. Proponents argue that the bill could create jobs and stimulate economic growth by attracting high-tech industries to Montana. Critics, however, warn that the tax incentives may lead to significant reductions in local tax revenues, which could affect funding for public services.

The implications of this legislation are noteworthy. If passed, it could position Montana as a competitive player in the growing data center market, which is increasingly vital in the digital economy. Experts suggest that successful implementation of the bill could lead to increased investment and job creation in the tech sector, while also raising questions about the long-term sustainability of tax incentives.

As the legislative process continues, stakeholders from various sectors will be closely monitoring the discussions surrounding Senate Bill 540, as its outcomes could shape the future of Montana's economic landscape.