States Increasingly Pulling Rug Out From Under Big Tech With Tax Break Reversals
States are increasingly reversing billions of dollars in tax breaks for data centers due to rising costs, the AI boom, and community concerns over electricity and water demands. Ohio's Governor paused new applications for these exemptions after their costs far exceeded estimates, and New Jersey eliminated remaining tax credits. This policy shift affects tech giants like Amazon, Meta, and Google, who have historically leveraged such incentives for facility development.
States across the U.S. are increasingly retracting billions of dollars in tax incentives previously offered to data center developers, a shift driven by the exponential growth of artificial intelligence and mounting public concern over resource demands. More than ten states have either paused or canceled data center tax exemptions, impacting major tech companies like Amazon, Meta, and Google that have historically relied on these benefits for their nationwide facility expansion.
Ohio Governor Mike DeWine, for instance, in May paused new applications for data center sales tax exemptions. This decision came as the cost of the exemption soared to over $1.5 billion in 2025, significantly exceeding initial state estimates and raising questions about taxpayer subsidies for AI infrastructure. Similarly, New Jersey lawmakers in August eliminated $250 million in remaining tax credits for data center projects, just two years after making $500 million available, reflecting a rapid change in public sentiment.
Other states, including Illinois, Washington, and Virginia, have also moved to halt or reevaluate such tax breaks. Virginia, a leading state for data centers, projects an estimated $1.94 billion in lost sales-tax revenue from its exemption in fiscal year 2025. Texas officials are scrutinizing proposed data center projects amidst concerns about the state's power grid and local community impacts. While former President Donald Trump advocates for data centers as economic boons, tech companies like Amazon highlight their job creation, investment, and tax contributions, with Amazon reporting a $19.7 billion investment in Ohio and significant property tax payments in 2024.