Ohio Suspends Data Center Tax Break as Opposition Grows

The state of Ohio — one of America's hot regions for data center construction — "is suspending a tax break that has been critical to its competition with other states," reports the Associated Press. The move "comes as tax breaks for energy-hungry AI data centers are increasingly playing a role in state budgets," the article points out. But they also note the expanding data center industry "is under pressure to pay the full costs" The size of Ohio's tax break skyrocketed, dwarfing previous projections, as opposition to data centers is sweeping through cities, suburbs and towns there and prompting lawmakers to form a committee to study the impact. In the meantime, residents are trying to bypass the GOP-controlled Legislature and get a referendum on November's midterm election ballot that's designed to permanently ban hyperscale data centers, likely the strictest such statewide ban under consideration in the U.S... The state, in 2024, had used previous history in projecting that the exemption would total $136 million in fiscal 2025 and $142 million in fiscal 2026. It was $554 million in 2024 and nearly $1.6 billion in 2025, the state reported... State tax breaks for the massive data center industry are facing growing criticism by governors and lawmakers... Thirty-eight states have some form of a sales tax break for data centers, according to the National Conference of State Legislatures... [Though many were passed before 2022, when data centers were smaller.] Ohio's exemption is fairly broad, applying not only to construction materials, but to the expensive equipment — such as server racks and cooling systems — used in data centers. Operators might buy new server racks every couple of years as the technology improves.

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