Ohio data center tax break cost $1.4 billion more than expected in 2025

A recent analysis by the Ohio Department of Taxation reveals that the state's sales tax exemption for data centers cost significantly more than initially forecasted. In 2024, the tax break amounted to $555 million, four times the estimate, and in 2025, it reached $1.6 billion, eleven times the original $136 million projection. This exemption, which also includes local sales taxes, benefits major tech companies like Meta, Google, and Amazon, which have developed large data center facilities in Ohio.

Andrea Lannom, spokesperson for the Ohio Department of Taxation, attributed the forecasting discrepancies to the accelerating growth of the data center industry and taxpayer confidentiality concerns, which limited the department's ability to share data prior to 2024. The inaccurate forecasts have complicated legislative efforts, with state lawmakers having voted to terminate the tax break in the most recent budget to fund income tax cuts. However, Governor Mike DeWine vetoed this proposal, arguing the exemption is crucial for attracting data center developers.

House Speaker Matt Huffman, a Republican, has expressed a desire to override the governor's veto but currently lacks the necessary political support. Progressive economist Zach Schiller from Policy Matters Ohio has long criticized the tax department's lowball estimates, and he expressed concern about the state's ability to alter existing long-term contracts. In response to public pressure and the escalating costs, lawmakers have formed a special legislative committee, chaired by Rep. Adam Holmes, a Muskingum County Republican, to investigate the discrepancies and the broader implications of data center development. Sen. Kent Smith, a Cuyahoga County Democrat, highlighted the tax break as one of the state's most expensive incentives, emphasizing the need for transparency.