Ohio suspends data center tax breaks after losing $1.5 billion in revenue – but ongoing projects will still get the benefits

• Ohio's tax exemption for data centers has been temporarily paused for new projects
• The scheme was projected to cost $136m in 2025, but it cost nearly $1.6b
• Hyperscalers invested over $27b in the state in 2025 alone

Ohio Governor Mike DeWine has issued a temporary reversal of the state's tax exemption for data centers while lawmakers review the program and its impact on state finances, energy infrastructure and local communities.

According to the Associated Press, the change only impacts new applicants and won't be applied to previously approved incentives.

The change comes as the number of data center projects in Ohio grows, with major hyperscalers like Amazon, Microsoft, Google and Meta all calling the state home for some of their cloud operations.

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Ohio to temporarily pause data center tax exemption

AP reports that the state had predicted a $136 million loss in taxes in 2025 due to the scheme, and $142 million in 2026, however the real figures have been dramatically higher. In 2024, the state missed out on $554 million in taxes, and in 2025 this figure stood close to $1.6 billion.

Some of the tax exemptions that the state offered, and has now paused, include sales tax on servers, networking equipment, storage systems and other necessary infrastructure.

However, with data centers renowned for their high resource consumption, local residents have expressed concerns over electricity demand, water consumption land use and other local infrastructure pressures. Already, around 18 Ohio communities have enacted or considered moratoriums or restrictions on data center development, per The Ohio Newsroom.

"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," DeWine said.

Although Ohio has lost billions in taxes since introducing the scheme, the Governor did acknowledge the positive impacts these projects have had on creating new jobs and attracting new businesses. Additionally, projects that benefited from the state's tax exemptions reported a total capital investment of $27.2 billion in 2025 alone, marking major spend in the state.

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