Massachusetts Weighs $100 Million for Defense Tech

Massachusetts' next economic development bond bill has passed both chambers in different versions. Governor Maura Healey (D) filed the Mass Wins Act (H.5386, "An Act relative to Massachusetts winning global investment, talent, and innovation") on April 16, 2026 as a $305 million package with 120 policy sections aimed at applied artificial intelligence, quantum computing, defense technology, and robotics. The House passed an enlarged $561 million version (H.5562) 148-2 on July 8, 2026. The Senate answered with a $575.4 million version (S.3178) just after midnight on July 24, 2026.

The bill is the follow-on to the $3.96 billion Mass Leads Act of 2024. States from Ohio to Virginia spent this year pausing or taxing data center incentives, and on June 25, 2026, Massachusetts paused new applications for its own data center sales tax exemption. The Mass Wins Act instead competes for the AI economy by directly funding compute infrastructure, capital grants, and supply chains.

The open questions are which of the three versions of the SHIELD, applied AI, and robotics programs survives, and when the quasi-public agencies that will run them begin writing guidelines.

The Governor's filing paired $305 million in new borrowing with $143.5 million in deauthorizations of older bond balances, and the House and Senate each roughly doubled the total without touching the original programs. What follows is what each version does, how it fits with the state's data center policy, and what the legislative calendar means for AI, defense, and advanced manufacturing projects.

What the Mass Wins Act Proposes

The capital side concentrates $250 million of the $305 million on defense, AI and robotics R&D, and downtown vitality. Section 113 of H.5386 directs the treasurer to issue up to $305 million in bonds with terms of not more than 30 years, payable not later than June 30, 2061, according to the Massachusetts Taxpayers Foundation's summary of the bill as filed. Exhibit 1 lists the eight capital programs in the filed bill.

The policy sections carry direct dollar value for operating companies. The LLC filing fee cut (Section 98: $500 to $100, with the first annual report dropping to $200, effective January 1, 2027) saves a new company $700 across its certificate and first annual report. The expanded small business energy exemption (Section 76) removes the 6.25% sales tax on gas, steam, electricity, and heating fuel for businesses with 10 or fewer employees and under $2 million in gross income, worth $2,500 a year to a shop spending $40,000 on utilities. The administration says 20,000 more businesses would gain access. The internship tax credit under M.G.L. c. 63, § 38UU, enacted in 2024 but tied to a surplus trigger, would activate for tax years beginning January 1, 2027. The credit is the lesser of $5,000 or 50% of wages per net-new qualified intern, capped at $100,000 per employer and $10 million statewide, so an employer hosting 10 qualifying interns could claim up to $50,000 annually. The bill also directs the Pension Reserves Investment Management (PRIM) Board (Section 104) to commit $50 million to $100 million to funds backing early- and growth-stage Massachusetts companies, gives MassVentures grant preference to recipients of federal Small Business Innovation Research and Small Business Technology Transfer (SBIR/STTR) awards (Sections 109-110), requires that any consideration offered in place of garden leave under a noncompete be negotiated at separation and be worth at least as much as garden leave (Sections 96-97), and requires utilities to offer discounted electricity rates to large employers relocating to Massachusetts without shifting costs to other ratepayers.

What the House and Senate Added

The House rewrote and enlarged the bill before passing it 148-2 on July 8, 2026. House Ways and Means redrafted H.5386 into H.5562 at $425.1 million, and floor amendments added roughly $136 million, producing a $561 million package spanning nine areas: applied AI and quantum, defense, robotics, agricultural technology, the creative economy, downtown revitalization, local economic development, housing, and international business attraction. The House kept the Governor's $10 million for agtech and food science and added $120 million for housing ($50 million for commercial-to-residential conversion grants, $50 million for remediation of former state buildings, and $20 million for veterans housing) and a $200 million bridge-funding reserve ($175 million public, $25 million private nonprofit) for universities facing federal research funding disruptions. It dropped the Governor's "GlobalMass" fund-of-funds, which Economic Development Secretary Eric Paley had called the bill's centerpiece, along with the proposed Transparency in Frontier AI Act and the MassCompute public cloud cluster, according to State House News Service.

The Senate went larger still and picked up the AI rules the House left out. Senate Ways and Means reported its redraft on July 16 at $325.1 million in bonds plus $100 million in direct fiscal 2026 appropriations for research at public higher education institutions. Two days of floor amendments lifted the total to $575.4 million. The Senate version keeps the $100 million defense, $75 million applied AI, and $25 million robotics programs and the Governor's $20 million for early-stage and high-growth venture sites, adds $20 million for community development financial institutions, requires large frontier AI developers to adopt safety frameworks and submit to periodic independent third-party audits, bans cryptocurrency kiosks, and rewrites the Chapter 62F tax-cap trigger on a 31-8 vote. Exhibit 2 compares the three versions.

How Massachusetts Funds AI and Handles Data Centers

Massachusetts funds AI capacity directly through the AI Hub and grant programs. The Mass Leads Act (Chapter 238 of the Acts of 2024, signed November 20, 2024) authorized $100 million to create the Massachusetts AI Hub, launched December 19, 2024 at MassTech, alongside a $75 million Massachusetts TechHubs program. The AI Hub's anchor is a partnership with the Massachusetts Green High Performance Computing Center in Holyoke, a joint venture of Boston University, Harvard, MIT, Northeastern, UMass, and Yale, with state and university investments expected to exceed $100 million over five years to expand hydro-powered, high-performance computing that startups and businesses can access.

Massachusetts has joined other states in pulling back data center tax incentives. On May 27, 2026, Ohio paused new awards of its data center sales tax exemption after the state reported a 2025 cost of nearly $1.6 billion against a $136 million forecast. Virginia's budget added a $0.011 per kilowatt-hour data center electricity tax effective July 1, 2026; Illinois paused new data center incentive deals as of July 1; and Arizona enacted a three-year exemption moratorium running through June 30, 2029. On June 25, 2026, Massachusetts paused new applications for the qualified data center sales and use tax exemption that the Mass Leads Act created. The Mass Wins Act puts state capital into shared compute, grant programs, and supply chains, where the Legislature can see, cap, and redirect every dollar. Exhibit 3 compares the Mass Wins totals with the state's economic development bond bills since 2018.

Where the Bill Stands

Neither chamber has questioned the $200 million in defense, applied AI, and robotics authorizations. The chambers differ on the size and eligibility of the university bridge fund.

In 2024 the House and Senate passed their Mass Leads versions in early summer, negotiators announced an agreement in principle on November 7, the conference report was filed November 13, on November 14 the House accepted it 137-8 and the Senate enacted it 39-1, and Governor Healey signed the $3.96 billion bill on November 20, 2024. This year the path is easier. The joint rules the Legislature adopted in June 2025 for the 194th General Court expressly permit formal sessions after July 31 of the second year for reports of conference committees formed on or before that date, so conferees do not need unanimous consent in an informal session to move a bond bill. They need a report, at least 24 hours between its filing and a vote, and a roll call.

Program design will be set after enactment. Once the final bill is enacted and signed, MassTech, the Life Sciences Center, MassCEC, MassDevelopment, and MassVentures will translate the SHIELD, applied AI, and robotics authorizations into grant guidelines, solicitations, and scoring criteria. In 2024, the AI Hub was announced 29 days after the Mass Leads Act was signed. The agencies that will run the 2026 programs are the same ones. Exhibit 4 shows the bill's path to date.

What to Do Now

If your company plans a defense, applied AI, or robotics project in Massachusetts, this bill is worth a look. Its $100 million SHIELD, $75 million applied AI, and $25 million robotics programs are identical in all three versions. MassTech and its partner agencies will write the guidelines once the bill is signed. If you want a read on fit before the Legislature finishes the bill, reach out to our team.

References

1. Mass.gov, Governor Healey Files Mass Wins Act to Create Jobs, Lower Costs and Attract Global Investment, April 16, 2026.
2. 194th General Court of the Commonwealth of Massachusetts, Bill H.5386, An Act relative to Massachusetts winning global investment, talent, and innovation.
3. 194th General Court, Bill H.5576 / S.3178, An Act relative to economic development in the commonwealth, bill history.
4. Massachusetts Taxpayers Foundation, Mass Wins Act Summary, May 28, 2026.
5. Massachusetts Taxpayers Foundation, MTF Summary of the House Mass Wins Act, July 15, 2026.
6. Massachusetts Municipal Association, Hearing held on economic development bill, June 1, 2026.
7. State House News Service, House readies $425M economic bill, minus Healey's centerpiece proposal, July 6, 2026.
8. Massachusetts House of Representatives, House Passes Economic Development and Competitiveness Bill to Strengthen Massachusetts Economy, July 8, 2026.
9. WBUR/State House News Service, Mass. House passes $561M catch-all bill, including policies from AI to horse race bets, July 9, 2026.
10. Massachusetts Senate, Senate Passes Economic Development Bill Investing in Housing, Research, and Responsible AI, July 23, 2026.
11. State House News Service via Daily Hampshire Gazette, Senators pad $575 million economic development bill, July 24, 2026.
12. Massachusetts Legislature, Fact Sheet: Joint Rules Agreement of the 194th General Court of Massachusetts, June 2025.
13. Mass.gov, Governor Healey Announces Massachusetts AI Hub to Make State Global Leader in Applied AI Innovation, December 19, 2024.
14. Mass.gov, Governor Healey Signs Economic Development Bill to Strengthen Massachusetts' Global Leadership in Climatetech, Life Sciences and AI, November 20, 2024.
15. 193rd General Court, Bill H.5100 (Mass Leads Act), bill history, enacted as Chapter 238 of the Acts of 2024.
16. Mass.gov, M.G.L. c. 63, § 38UU, Internship tax credit.
17. Office of Governor Mike DeWine, Governor DeWine Announces Pause of Data Center Tax Exemption, May 27, 2026.
18. MultiState, State Data Center Policy: Governors Restrict Tax Exemptions, June 22, 2026.
19. Greenberg Traurig, Virginia Legislature Approves Tax on Data Center Electricity Consumption, June 2026.
20. Mass.gov, Governor Healey Halts Data Center Tax Incentive and Calls for Strict Guardrails to Protect Ratepayers, Environment, Public Health, June 25, 2026.
21. Associated Press via Spectrum News, Ohio suspends data center tax break as tech firms face pressure to pay the cost to power AI, May 28, 2026.
22. MassTech, Healey-Driscoll Administration Launches $75 Million TechHubs Program to Boost Regional Innovation, March 10, 2025.

© Copyright 2026 TC Policy Group, LLC (d/b/a Crawford Partners). The views expressed herein are those of the author(s) and not necessarily the views of Crawford Partners, its management, its subsidiaries, its affiliates, or its other professionals. Crawford Partners is not a law firm and cannot provide legal advice.