A debate on tax breaks stalls new data center laws in Ohio. What now?
An eleventh-hour legislative effort in Ohio to regulate data centers, create an electric rate class, cut local tax abatements, and regulate water usage failed. The proposed House Bill 646 died due to objections over extending sales and use tax breaks. This means no substantive action is expected before November on these regulations.
An urgent legislative attempt to pass new data center regulations in Ohio, known as House Bill 646, failed just before the summer recess. The proposed legislation aimed to establish a dedicated electric rate class for data centers, reduce local tax abatements by 50%, and introduce regulations for water usage and discharge from these facilities.
The bill's demise stemmed from disagreements among House members regarding the extension of an existing sales and use tax break for data centers. Senator Brian Chavez (R-Marietta) highlighted the challenge of altering long-standing, multi-decade agreements, some of which were established during the Kasich administration and benefit companies like Amazon, Meta, and Google through the mid-2050s. These contracts were secured through the Ohio Department of Development, whose Director, Lydia Mihalik, acknowledged the possibility of renegotiation but noted companies would prioritize their business interests.
Representative Chris Glassburn (D-North Olmsted) expressed frustration over the state's significant underestimation of the sales tax break's cost, which exceeded $1.4 billion in 2025. He criticized the lack of insight into the true revenue loss and called for renegotiating existing agreements. Although the Ohio House might reconvene on June 24, Senator Chavez confirmed that the Senate would not be in session, making further immediate action on the bill unlikely before November.