Data center tax breaks paused as lawmakers study impact

Ohio Governor Mike DeWine announced a pause on any new sales and use tax exemptions for data centers across the state. This move comes as the Ohio State Legislature initiates a study into the rapidly growing data center industry and its broader impact. Critics, including Democrat State Sen. Kent Smith of Euclid, have argued that the state is being overwhelmed by data center development, threatening the power grid and water supply, and leading to significant revenue losses due to the exemptions.

A report from the Ohio Department of Taxation projected a revenue loss of over $1.5 billion for 2025 and more than $500 million for 2024 from these exemptions, far exceeding initial estimates. While DeWine acknowledged the value of data centers to the technology-driven economy, he supported the legislative study and directed the Ohio Tax Credit Authority to halt consideration of new exemption proposals after its next meeting. The governor clarified that this action suspends tax exemption requests, not data center construction itself.

In response, the Ohio Chamber of Commerce expressed disappointment, warning that Ohio risks losing economic gains to neighboring states that maintain similar incentives. Mathew Putnam, policy manager with the National Taxpayers Union, echoed concerns that the pause could put Ohio at a competitive disadvantage, noting that Ohio is currently sixth in the nation for data centers. The article also briefly mentioned Dane County, Wisconsin, considering an 18-month moratorium on hyperscale data centers to study complex issues.

Economist JC Bradbury from Kennesaw State University commented that nationwide pushback against data center tax breaks often stems from the industry's demands for special tax treatment rather than inherent negativity towards data centers. He suggested a shift towards