$136 Million Or $1.5 Billion? Ohio Freezes Data Center Tax Breaks After Math Goes Missing

Leslie Bolden Sat, May 30, 2026 at 2:33 AM UTC

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Gov. Mike DeWine of Ohio

Ohio Governor Mike DeWine ordered a sudden halt Thursday to new tax exemptions for data centers after the state discovered the program cost over $1 billion more than anyone predicted.

The Ohio Department of Taxation originally projected the state would lose $136 million in tax revenue for 2025. Instead, the actual cost soared to roughly $1.5 billion, according to reporting by The Plain Dealer. In response to the massive forecasting error and the rapid, exponential growth of the industry, DeWine directed the Ohio Tax Credit Authority to stop accepting new applications while state lawmakers launch an investigation.

This isn’t the first time the state miscalculated the cost of the incentive. In 2024, the sales tax exemption cost Ohio $554 million. State officials reportedly relied on outdated historical data to build their models, failing to anticipate the massive boom in facilities required to power artificial intelligence (AI) chatbots and online infrastructure. Ohio is currently a major national hub for the industry, housing more than 200 data center locations.

The scale of the mistake drew immediate, sharp criticism from both sides of the aisle.

US Currency (Unsplash)

“It’s alarming that the state’s forecasting so woefully underestimated the cost of this tax break and that we are just now finding out about it,” State Senate Democratic leader Nickie Antonio told The Plain Dealer.

Republican Ohio State Senator Bill Blessing was equally blunt, stating, “Every member of the general assembly should be furious over this.”

Blessing had already introduced legislation last July to eliminate the tax exemption entirely. While lawmakers successfully added the repeal to the state operating budget, DeWine used his veto power to keep the tax break alive, arguing at the time that it was vital for the state’s economic development. Following the new revenue revelations, Ohio State House Republicans still plan to move forward with a vote to override that veto.

Currently, Ohio holds sales tax agreements with 18 data center companies. The earliest contracts granted a 100% sales tax exemption lasting 40 years. Lydia Mihalik, the director of the Ohio Department of Development, noted that more recent deals have taken a “targeted approach,” cutting the benefit to a 50% exemption for 15 to 20 years.

DeWine’s office defended the overall economic impact of the program despite the pause.

“As the Governor recently noted, during 2025, the entities that received the $1.5 billion in sales and use tax benefits reported a total capital investment of $27.2 billion, showing a significant return on investment for Ohio,” a spokesperson for the governor told the Daily Caller News Foundation. “Also noted in the Governor’s recent statement, this pause reflects multiple factors, including increased utilization of the tax credit over the last year, the maturity of the data center industry in Ohio, and the recently formed legislative study committee.”

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In a separate statement on Wednesday, DeWine emphasized the role these facilities play in the modern landscape.

“Data centers are a critical component to today’s technology-driven economy, which depends on the virtual, large-scale exchange of information,” DeWine said. “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 technological innovation.”

The governor added that data centers with existing agreements reported a total capital investment of $27.2 billion in 2025.

The freeze on new requests will not cancel existing contracts or halt construction on projects that have already been approved. Dan Tierney, a spokesperson for DeWine, told the that the governor “felt it was the right time to let the citizens know, let businesses know that we’re going to pause on new offers of this tax incentive while that process plays out.”

Any future decision to bring back the tax break will likely rest with a new administration, as DeWine is currently term-limited. The policy shift comes during a highly competitive gubernatorial race between Democratic nominee Amy Acton and Republican nominee Vivek Ramaswamy. Ramaswamy has openly campaigned on a vision to transform the Ohio River Valley from the “Rust Belt” into a “Platinum Belt,” aiming to position the region as the next Silicon Valley.

Business groups expressed concern that the sudden policy shift could hurt the state’s competitive edge. Ohio is currently one of 38 states offering sales tax incentives to attract data centers.

“Ohio is facing a huge opportunity to lead, and making ourselves less business-friendly is not the way to maximize it,” said Steve Stivers, president of the Ohio Chamber of Commerce and a former Republican member of Congress.

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$136 Million Or $1.5 Billion? Ohio Freezes Data Center Tax Breaks After Math Goes Missing

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Source: “AOL Money”