Ohio Gov. Mike DeWine is putting the brakes on any new data center tax exemption requests as actual costs reported by the Ohio Department of Revenue have soared to $1.5 billion by 2025, 11 times the projected $136 million.
The pause will remain active while a joint state legislative committee considers the industry’s economic, power grid and environmental effects.
The 2024 estimate of sales tax exemption costs for data centers was about $550 million, four times the Ohio Department of Revenue estimate. In addition, the centers cost an estimated $166.8 million in local sales tax revenue by 2024.
Andrea Lannom, spokeswoman for the Department of Taxation, attributed the wide gap between costs and estimates to an increase in exemption requests.
“There has been significant growth in the data center industry and the use of the data center exemption since the publication of the Tax Expenditure Report [TER] in November 2024,” he said, adding that the report only comes out every two years and is based on “the best available data and growth forecasts available at the time.”
Through 2025, Lannon said data centers receiving the exemption reported total capital investment of $27.2 billion. During 2024, the entities indicated a total capital investment of 9.6 billion dollars.
The Ohio Tax Credit Authority, which reviews applications for state tax credits, has approved 20 waiver requests since 2014, according to local news reports.
Ohio has more than 200 data centers, including those owned by tech giants such as Google, Meta and Microsoft, making it the fifth-highest state for data centers in the country, according to the Ohio Office of Consumer Advocates. Most are in central Ohio, where land availability, access to transmission and proximity to consumers make development attractive, he says.
DeWine vetoed an effort in the state legislature to eliminate tax breaks from the state budget by 2025, but now appears willing to consider the economic and other impacts of data center growth in Ohio. Other impacts that have raised concerns about data centers across the country include water and energy use, noise and environmental impacts.
“I fully support the work of the Ohio General Assembly to study the issue and present facts about data centers, including the local benefits to communities when tax breaks are granted,” he said in a news release.
He added that “one of the reasons Ohio has been so successful in attracting new businesses and creating new jobs is that we have invested in the data infrastructure needed to support complex technology innovation.”
The tax credit authority will stop considering applications for tax exemption from the next meeting on 1 June. There is currently a pending request.
U.S. Sen. Bernie Moreno (R) has criticized Ohio’s tax breaks for data centers, including a $4.5 million break for Ark Data Centers, owned by private equity firm The Carlyle Group, which recently received approval to finance a $136 million expansion of data centers in Akron and Independence, Ohio.
He noted in a March letter to the tax authority that the project will only create 10 new jobs and that The Carlyle Group has $477 billion in assets under management.
“These data centers are costing the state dearly,” he wrote. “This is money that could be going to schools, roads or helping communities hardest hit by rising costs, not supplementing the profits of a company that is already swimming in cash.”
State Sen. Brian Chavez (R) of Marietta co-chairs the data center committee and described its goals,
“The primary purpose of this committee is to provide pertinent, relevant and accurate information to communities – to city councillors, county commissioners, councils and concerned citizens,” he said. “We want to make sure everyone has accurate information to have critical conversations and practical dialogues.”
Brian Turmail, vice president of partnership and industry image at AGC of America, says data centers are an important part of the economy and the construction industry.
He said the AGC “looks forward to sharing [with the committee] our industry’s perspective on the positive impact data centers are having in Ohio.”
He added that at least 37 states offer tax incentives for data center development.
“We look forward to Ohio continuing to have meaningful and discretionary incentives for the continued development of these valuable economic engines,” he said.
