Ohio suspends tax break for data centers needed to power AI

Key Points:

• Ohio Governor Mike DeWine announced a suspension of a key tax break for hyperscale AI data centers amid growing opposition and concerns over the rapidly increasing cost of the incentive, which ballooned to nearly $1.6 billion in 2025 from earlier projections of $142 million.
• The tax break pause aims to allow the state legislature's new committee to study the economic, environmental, and security impacts of data center development before granting new incentives, reflecting rising public and political scrutiny.
• Residents are actively seeking a referendum for the November midterm ballot to permanently ban large data centers in Ohio, potentially creating one of the strictest statewide bans in the U.S., with a deadline to gather over 400,000 signatures by July 1.
• While DeWine supports data centers as vital to the economy and highlights $37 billion in related investments for 2024-2025, business groups and labor unions warn that halting the tax break risks losing tech investments to competing states.
• Ohio's tax break suspension occurs amid nationwide debates, with 38 states offering similar incentives and some, like Virginia, reconsidering or attempting to eliminate costly data center tax breaks as AI-driven demand for hyperscale facilities surges.