Ohio Governor Pauses Data Center Tax Breaks After Giving Away Far More Than Expected

Ohio is holding off on new tax breaks for data centers, as the lost revenue from the subsidies far exceeds earlier projections.

On Tuesday, Republican Gov. Mike DeWine directed the Ohio Tax Credit Authority to hold off on consideration of any new data center tax exemptions. The state legislature has a Joint Data Center Committee that is studying the growth of data centers in Ohio.

"I fully support the Ohio General Assembly's work to study the issue and bring forward facts about data centers, including the local benefits to communities when tax exemptions are granted," DeWine said in a statement.

"As this work is ongoing, I believe it is appropriate for the Ohio Tax Credit Authority to pause its consideration of new data center tax exemptions while the full impact of data center growth in Ohio is being reviewed."

Companies use the exemption to buy new servers and computing equipment without having to pay the state’s 5.75% sales tax. Developers that Ohio gave sales and use tax benefits reported $27.2 billion in capital investment in 2025, DeWine said.

Amazon, Alphabet, and Meta started building data centers about a decade ago, especially around central Ohio. Now, the Ohio Consumers' Counsel counts over 200 data centers in Ohio, the fifth-highest count among the states.

It follows reports from two local news outlets that Ohio is losing far more in tax revenue than it expected. The state gave almost $554 million in sales tax breaks in 2024. In 2025, that ballooned to $1.6 billion, Signal Ohio reported.

Developers are planning or building an additional 77 data centers, according to research from the University of Virginia's Weldon Cooper Center for Public Service. Data centers now use about 5.3% of Ohio's total electricity demand, but that will grow to 10.9% by 2030, then 23.7% by 2040, UVa found.

Backlash in the 'silicon heartland'

DeWine said the state was not looking to ban data centers outright. But the state didn't give a timeline for when it would resume offering the exemption. The Tax Credit Authority will look at one last potential tax exemption at a June 1 meeting.

What was once a rush of states jockeying for data center development has shifted with public opinion. Frequent neighbor complaints about data centers include noise and impact on home values, water, and local utilities. That's especially true in the Midwest, a data center magnet.

By the time Intel announced a $20 billion semiconductor manufacturing plant there, it hailed Ohio as the "silicon heartland."

Some Ohio cities now want to slow data center development. Cleveland, for instance, is mulling an all-out moratorium.

In a Wednesday meeting in Columbus of the Joint Data Center Committee, Asim Haque of PJM Interconnection told the state that data centers are driving growth in electric usage. But it takes a lot longer to build more power plants than it does to build more data centers.

Meanwhile, a petition to ban data centers in the state outright has gathered 400,000 signatures.

Tech companies push back

At the hearing, Dan Diorio, vice president for public policy at the Data Center Coalition, defended the data centers' role and said data demand is "on an exponential curve." He said the centers facilitate technology use by people and businesses, not just artificial intelligence.

The tax exemption helps the state attract data centers that would otherwise go to Indiana, Pennsylvania, or somewhere else, Diorio said. Thirty-eight states have tax benefits for data center developers.

"This is a far more efficient way of doing all the computing, processing, and storage that we need to facilitate our daily lives in the 21st century economy," Diorio told the committee Wednesday. "The need for connectivity, for the internet, is driving the digital infrastructure that supports that."

The data center industry was committed to paying its own way, including buying the needed energy for its uses, he said.

The Ohio Manufacturers' Association also cautioned against overreaction. Lindsey Short, managing director of energy and advocacy services for the association, said in a statement earlier this month the state should not halt major technology investments.

“When customers feel growth is being rushed, costs are being shifted, and utilities are writing the rules, backlash becomes inevitable," Short said. "The answer is not a statewide ban. It is transparency, accountability, and protection for existing customers.”