Kansas’s 2025 data-center incentive is now a campaign issue, but it is not a direct cash grant: Senate Bill 98 created a sales-tax exemption for qualifying projects that meet investment, jobs and operating requirements. In the 2026 governor’s race, candidates Cindy Holscher and Ty Masterson are debating whether those existing conditions are enough or whether approvals should pause until stronger protections are in place.
What Kansas’s data-center incentive provides
Senate Bill 98, enacted as Chapter 124 of the 2025 Session Laws, establishes a sales-tax exemption for eligible costs tied to constructing, acquiring and operating a qualified data center. The covered purchases include certain contractor purchases, data-center equipment and related labor. Kansas Department of Revenue guidance says the exemption took effect July 1, 2025, and lasts 20 years from a project’s commencement of operations. The enacted law and state tax guidance define the program.
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Eligible equipment includes servers and networking equipment, backup generators, cooling equipment, water-conservation systems and software. Electricity itself is not an eligible cost. That distinction matters: the law offers a tax exemption on specified project costs, while separately requiring a participating firm to buy electricity from the public utility certified to serve the site.
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To qualify, a company must meet investment and employment thresholds and make additional commitments. The law sets these requirements:
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- Invest at least $250 million in the aggregate by the fifth year of operations.
- Create and maintain at least 20 new Kansas jobs within two calendar years after operations begin.
- Begin construction within ten years of entering the agreement.
- Purchase electricity for ten years from the public utility certified to serve the site.
- Undertake water-conservation practices.
- Apply for the program and undergo state review, including review by the Kansas Intelligence Fusion Center before public benefits are awarded.
These are statutory commitments, not evidence that projects have already delivered a particular number of jobs or conserved a measured volume of water. The available legislative analysis does not establish actual statewide job creation or measured water and energy use from projects operating under SB 98.
What the $9.8 million estimate means
The Kansas Department of Revenue estimated in 2025 that a hypothetical $250 million project could result in $9.8 million of foregone sales tax, assuming project costs similar to the Enterprise Zone exemption at 60 percent. The Legislative Research Department’s note says the total fiscal effect was unknown and that the estimate could extend over the exemption’s duration. It is not a bill for an actual project, nor an estimate of the full program’s realized cost. The legislative fiscal note provides the assumptions and qualification.
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- Keep critical network equipment secure: glass door and side panels are lockable to prevent unauthorized access; Front door can be installed on either side of the front of the cabinet to satisfy your door swing orientation preference
- Easy equipment configuration: Fully adjustable mounting rails and numbered U positions, with square holes for easy equipment mounting with top and bottom punchout panels for easy cable access
- Durability: Made of high quality cold rolled steel holds up to 110lb (50kg) (Easy Assembly Required)
- PCI & HIPPA and EIA/ECA-310-E compliant
The legislative analysis records proponents’ argument that the incentive could attract data-center investment and related economic activity. It also records a Kansas Sierra Club representative’s concern that energy and water demands could strain resources and create unforeseen costs for the state and taxpayers. Those are competing arguments, not established outcomes. The sources do not show realized statewide tax expenditures or quantify infrastructure costs attributable to SB 98 projects.
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Why the incentive is part of the governor’s race
Axios reported that Democratic candidate Cindy Holscher and Republican candidate Ty Masterson clashed over data centers during their State Fair debate in September 2026. According to Axios, both had voted for the 2025 law. Holscher later said she regretted her vote after hearing public concerns and backed a moratorium until stronger protections were put in writing. Masterson accused her of changing position, said existing guardrails were adequate, and argued that siting decisions generally belonged to local governments. Axios’s campaign report is the source for this account; it is not a primary debate transcript.
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- Design Features:maximum mounting depth of 14 in,cables can be fixed on the side panel;Open frame server rack achieves effortless inspection, replacement and assemble
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Masterson framed the issue in national as well as state terms, telling Axios: “President Trump is right, America wins the AI race or we hand it to China. But folks build here on our terms or they don’t build here.” The dispute is therefore about the conditions for development—whether existing state requirements suffice, whether stronger protections should precede approvals, and how authority should be divided between state and local decision-makers.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.What remains unsettled about the law’s effects
The available sources establish the law’s terms and a conditional fiscal estimate, but they do not establish how much investment, employment, tax expenditure, water use or electricity demand projects approved under SB 98 have actually produced. Those outcomes should be evaluated with project-level and statewide data rather than inferred from the law’s promises or from the $9.8 million hypothetical estimate.
For voters assessing proposals to retain, revise or pause the incentive, the central questions are whether water and energy protections are specific and enforceable; who pays for supporting infrastructure; whether the state can recover benefits if a company fails to meet its commitments; and how siting authority should be shared between local governments and the state. Those questions frame the policy choice, but the cited sources do not provide enough outcome data to score the program on them.
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