Blog

NCDOR Important Notice: Repeal of Exemptions for Electricity Used at Datacenters

The North Carolina Department of Revenue (“NCDOR”) issued a notice explaining the repeal of the sales and use tax exemption for electricity purchased for use at certain Certified Datacenters[1]. The repeal was enacted by Session Law 2026-41 and is effective July 7, 2026.

Under the new law, the electricity exemption applies through the billing period that began before August 6, 2026. Beginning with the first billing period that starts on or after August 6, 2026, electricity purchased for use at a Certified Datacenter is subject to the combined general rate of sales and use tax.

Purchasers that previously claimed the exemption must inform their electricity providers that they are no longer eligible for the exemption. Electricity retailers must then charge sales tax on electricity purchased by these customers beginning on August 6, 2026. Failure to pay the tax may result in liability for the tax, penalties, and interest.

Session Law 2026-42 also creates a new reporting requirement. Purchasers of electricity for use at a Certified Datacenter must file a return or report with NCDOR “within 30 days after the end of each quarter, reporting the amount of tax paid on the electricity.” The first return/report is due October 30, 2026.

The repeal is limited to the electricity exemption. It does not repeal other sales and use tax exemptions applicable to items purchased for use at Certified Datacenters.

For more information, see the published NCDOR notice.

Young Moore and Henderson lawyers are available to answer questions about how this repeal affects your business, and they can provide additional North Carolina state and local tax advice. For assistance, please contact Reed Hollander or Marlo Donato Kalb.

[1] For a comprehensive definition of a “Certified Datacenter,” see the “Definitions” section of the NCDOR notice.