The Oklahoma data center sales tax exemption removes state sales and use tax on machinery and equipment purchased by businesses primarily engaged in computer services or data processing, provided the facility meets a specific out-of-state revenue threshold. It is codified at paragraph 21 of ยง 68-1357v2 of the Oklahoma Statutes, and unlike incentive programs in Ohio, Tennessee, Idaho, or Illinois, it carries no minimum capital investment requirement. Qualifying turns on what your business does and where its revenue comes from.
Who Qualifies
The statute defines qualifying operations by Standard Industrial Classification (SIC) code rather than the newer NAICS system. Two tiers exist, each with its own out-of-state revenue floor:
- SIC 7372 and 7373 (prepackaged software and computer integrated systems design): at least 50% of annual gross revenue must come from sales to out-of-state buyers or consumers.
- SIC 7374 (computer processing and data preparation): at least 80% of annual gross revenue must come from out-of-state sales.
All sales to the federal government count as out-of-state sales regardless of where the work is physically performed. For a facility handling federal contracts from an Oklahoma location, that rule can be the difference between clearing the threshold and missing it.
Your facility must be “primarily engaged” in computer services or data processing under the applicable SIC code. This has to be the core business at the location, not an incidental activity. A manufacturer running an internal server room does not qualify. A hosting company serving mostly Oklahoma-based customers does not qualify either, because the exemption is designed to attract export-oriented technology operations that bring outside revenue into the state.
The revenue calculation uses annual gross revenue, not net income.
What the Exemption Covers
The exemption applies to machinery and equipment purchased and used by the qualifying establishment. For a data center, that typically means servers, networking hardware such as routers and switches, storage arrays, cooling equipment, and uninterruptible power supply units. The statutory language is broad enough to reach most capital equipment a data processing operation would buy.
The exemption covers state sales and use tax only. Local sales taxes are not addressed by this provision.
One notable boundary: the statute does not exempt electricity purchases. Power is often the single largest recurring expense for a data center, and some states extend their data center incentives to utility costs. Oklahoma’s does not. If electricity treatment matters to your site selection, confirm the current position directly with the Oklahoma Tax Commission.
How To Claim the Exemption
Qualifying businesses file a sworn affidavit with the Oklahoma Tax Commission stating that the facility meets the SIC code and revenue requirements. The affidavit itself serves as the application.
The affidavit must be filed annually. This is not a one-time certification. Each year, you re-establish eligibility by confirming the facility still falls under the qualifying SIC classification and still meets the out-of-state revenue threshold for that classification. The Tax Commission may request supporting information during its review, so keep clean records of revenue sources and equipment purchases.
Once approved, you present your exempt status to vendors when buying qualifying machinery and equipment, so sales tax is not charged at the point of sale.
No Investment Minimum and No Sunset
Two structural features distinguish Oklahoma’s exemption from many competing state programs.
First, there is no minimum capital investment. Oklahoma’s own incentive evaluation noted that roughly $100,000 in qualified purchases in a given year is enough for the exemption to have practical value. Compare that to states that require $100 million or $250 million before any relief is available.
Second, the exemption has no time limit. As long as your operation continues to meet the SIC code and revenue tests each year, the sales tax exemption on machinery and equipment remains available. You are not forced to front-load equipment purchases into a 10- or 15-year incentive window.
The Web Search Portal Alternative
Oklahoma provides a separate, broader exemption for web search portals classified under NAICS code 519130. Where the general computer services exemption covers only machinery and equipment, the web search portal provision reaches goods, merchandise, tangible personal property, machinery, and equipment. The qualifying threshold is at least 80% of annual gross revenue from out-of-state sales. Operations that maintain searchable databases of internet content should evaluate whether this route covers a wider range of purchases than the standard exemption.
Other Oklahoma Incentives That Stack
Quality Jobs Program
Data center operations are eligible for the Oklahoma Quality Jobs Program, which pays a cash rebate of up to 5% of quarterly payroll for up to 10 years. Qualifying companies must create new jobs meeting an average wage threshold and reach $2.5 million in new annual payroll within three years. Eligible NAICS codes include 518210 (data processing and hosting), 519130, and 519290. Rebates are paid quarterly rather than accrued as deferred credits.
Ad Valorem Property Tax Exemption
Data centers investing in new real property in Oklahoma may qualify for a property tax exemption on that investment. The exemption covers real property such as buildings and land improvements. It does not extend to personal property like servers or networking equipment. For a facility where equipment costs often exceed the building itself, this is a partial benefit rather than a comprehensive one.
Legislative Activity To Watch
Oklahoma’s data center policy environment is active. The state Senate has passed legislation aimed at protecting utility ratepayers from costs associated with data center energy consumption, and at least one bill has proposed a moratorium on new data center construction until 2029. As of early 2026, none of these measures had eliminated the existing exemption, but the terms available today could shift. If you are planning a project on a multi-year horizon, track the Oklahoma Legislature each session.