Data Centers
Taking Fire Over Ballooning Costs, Ohio Gov. Pauses Tax Incentives for Data Centers
The pause comes after actual costs of tax exemptions ballooned to about $1.5 billion in 2025
Responding to soaring costs, Ohio is pausing tax exemptions for data centers as it considers the economic and other impacts, both positive and negative, of data centers.
Ohio Gov. Mike DeWine is applying the brakes to any new data center tax exemption requests, since actual costs reported by the Ohio Dept. of Taxation have soared to $1.5 billion in 2025, 11 times the $136 million projected.
The pause will remain active while a joint legislative state committee considers the economic, electrical grid and environmental effects of the industry.
The 2024 estimate of sales tax exemption costs for data centers was about $550 million, four times the Ohio Dept. of Taxation's estimate. In addition, the centers cost about $166.8 million in lost local sales tax revenue in 2024.
Andrea Lannom, a spokesperson for the Dept. of Taxation, attributes the wide gap between costs and estimates to an increase in exemption applications.
“There has been significant growth in the data center industry and in the use of the data center exemption since the publication of the Tax Expenditure Report [TER] in November 2024," she says, adding that the report only comes out every two years and is based on “the best available data and growth forecasts available at that time.”
During 2025, Lannom says the data centers that received the exemption reported a total capital investment of $27.2 billion. During 2024, the entities noted a total capital investment of $9.6 billion.
The Ohio Tax Credit Authority, which reviews requests for state tax credits, has approved 20 exemption requests since 2014, according to local news reports.
Ohio has more than 200 data centers, including those owned by tech giants such as Google, Meta and Microsoft, making it the fifth-highest state for data centers in the country, according to the Ohio Office of Consumers’ Counsel. Most are in Central Ohio, where land availability, transmission access and proximity to consumers make development attractive, it says.
DeWine vetoed an effort in the state legislature to eliminate the tax exemptions from the state budget in 2025, but now is apparently willing to consider the economic and other impacts of data center growth in Ohio. Other impacts that have generated concerns about data centers nationwide include water and power usage, noise and environmental impacts.
"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,” he said in a news release.
He added that "one of the reasons Ohio has been so successful in attracting new businesses and creating new jobs is that we have invested in the data infrastructure needed to support complex technological innovation.”
The tax credit authority will no longer consider tax exemption requests as of its next meeting on June 1. One request is currently pending.
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U.S. Sen. Bernie Moreno (R) has criticized Ohio's tax breaks for data centers, including a $4.5 million exemption for Ark Data Centers, owned by the private equity firm The Carlyle Group, which recently received approval to fund a $136-million expansion of data centers in Akron and Independence, Ohio.
He noted in a March letter to the tax authority that the project will create only 10 new jobs and that The Carlyle Group has $477 billion in assets under management.
"These data centers are costing the state dearly," he wrote. "That’s money that could go toward schools, roads, or helping communities hit hardest by rising costs—not padding the profits of a firm that’s already swimming in cash."
State Sen. Brian Chavez (R) of Marietta is a co-chair of the data centers committee and described its goals.
"The primary purpose of this committee is to give pertinent, relevant and accurate out to the communities—to the township trustees, the county commissioners, city councils and concerned citizens," he said. "We want to make sure everyone has accurate information to have critical conversations and practical dialogues."
Brian Turmail, vice president of Association & Industry Image for AGC of America, says data centers are an important part of the economy and the construction industry.
He says the AGC "looks forward to sharing [with the committee] our industry’s perspective on the positive impact data centers have in Ohio."
He adds that at least 37 states provide tax incentives for data center development.
"We hope that Ohio will continue to have meaningful, discretionary incentives for continued development of these valuable economic engines," he says.
