Ohio Governor Mike DeWine has temporarily halted the state's tax exemption for new data centers, a policy that had lured massive AI infrastructure investments but now faces mounting criticism over its ballooning fiscal impact. The Republican governor announced Wednesday that he directed the chair of the Ohio Tax Credit Authority to pause consideration of new exemption requests while the state legislature examines the rapid growth of these facilities.
The move comes as Ohio joins a handful of states reconsidering generous tax breaks for data centers, with technology companies increasingly pressed to shoulder the costs of the sprawling, energy-hungry complexes. According to local reports, the tax breaks swelled to $1.5 billion last year—far exceeding initial projections of $135 million.
State Representative David Thomas, a Republican, took to social media to highlight the disconnect. “The Legislature removed this Sales Tax Exemption on Data Centers in the 2025 budget, but that was vetoed,” he wrote. “One year later, what was estimated at $300 million in lost revenue is now $1.6 billion. The legislature was not told of this cost until seeing it in the newspaper.”
DeWine emphasized that he “fully supports” the legislature’s review, saying he wants “facts about data centers, including the local benefits to communities when tax exemptions are granted.” He stopped short of endorsing a moratorium, noting that data centers are “a critical component to today’s technology-driven economy.”
The controversy reflects a broader backlash against AI and the infrastructure it requires. Voters are increasingly concerned about rising utility bills and the environmental and community impacts of these facilities. The issue is becoming a wedge in this year’s midterm elections and state budget battles, as similar debates unfold in states like Utah, where a planned AI data center has drawn scrutiny over foreign influence and energy costs. Kevin O'Leary has blamed China for a smear campaign against that project.
Local activist groups in Ohio are pushing for a ballot measure that would ban data centers with a peak load exceeding 25 megawatts per month. To qualify for the November ballot, they must collect over 413,000 signatures from at least 44 of Ohio’s 88 counties by July 1, according to the Ohio Capital Journal.
The suspension does not affect existing exemptions or data centers already under construction. But it signals a significant shift in Ohio’s approach to attracting tech investment, as policymakers grapple with the trade-offs between economic development and fiscal responsibility. The legislature’s study is expected to produce recommendations before the end of the year.
