NY Exclusive: Dial-Up-Era Law Lets Today's AI Data Centers Avoid Millions in State and Local Taxes

A Syracuse.com exclusive investigation found that New York's internet data center sales tax exemption — originally enacted during the dial-up internet era to attract early web hosting facilities — is now shielding modern AI compute campuses from millions of dollars in state and local taxes. The law's broad language covers servers, climate-control equipment, fiber optic cabling, and fire suppression systems used by any operator of an 'internet data center,' a definition that today encompasses large AI hyperscale facilities. State legislators have proposed bills to cap or repeal the exemption, but none advanced before the legislature adjourned.