Ohio Freezes $1.57 Billion Data Center Tax Break

Ohio's data center sales tax exemption is still frozen, and it will stay frozen until a new governor takes office. On August 5, 2026, Gov. Mike DeWine told reporters that the pause he ordered in May will continue until he leaves office in January 2027, leaving the future of the exemption to his successor and to a General Assembly that does not return to Columbus until after the November 3 election.

The freeze began on May 27, 2026, when DeWine directed the Ohio Tax Credit Authority to stop considering new data center exemption requests while the legislature's Joint Data Center Committee studied the industry's growth. The committee, an eight-member panel drawn from both chambers and both parties, took roughly 20 hours of testimony between May 27 and mid-June from state agencies, utilities regulators, local officials, environmental groups, more than 100 members of the public, and lobbyists for Amazon, Google, Meta, and Microsoft.

Ohio is not alone. Illinois paused new data center incentives effective July 1, 2026. Arizona suspended its data center sales tax exemption for three years, from July 1, 2026 through June 30, 2029. Maine's LD 713, signed April 23, 2026, excludes data centers from the Business Equipment Tax Exemption and Dirigo programs.

What the Joint Data Center Committee Was Asked to Do

The committee's mandate was fact-finding, and it stayed that way. Announced May 13, 2026 and co-chaired by House Energy Committee Chair Rep. Adam Holmes (R-Nashport) and Senate Energy Committee Chair Sen. Brian Chavez (R-Marietta), the panel also seats Reps. Thad Claggett (R-Licking County), Heidi Workman (R-Rootstown), and Chris Glassburn (D-North Olmsted) and Sens. Bill Reineke (R-Tiffin), Shane Wilkin (R-Hillsboro), and Willis Blackshear Jr. (D-Dayton). Its mission statement assigns five tasks: (1) energy cost and grid-reliability impacts on other Ohio ratepayers, (2) state and local economics, including tax base, local revenue, and jobs, (3) environmental impacts, including water use and land use, (4) public safety and national security considerations, and (5) public awareness. It first met on May 27, 2026, the day DeWine announced the pause.

No statutory deadline required a written report, and none was produced. The committee's hearings ran through mid-June. State agencies, including the Ohio Environmental Protection Agency, the Ohio Department of Natural Resources, the Public Utilities Commission of Ohio (PUCO), and the Department of Development, testified on May 27. More than 100 members of the public testified on June 1, lobbyists for Amazon, Google, Meta, and Microsoft on June 4, and county commissioners, farm groups, and building trades on June 8. By June 18 the Senate majority caucus summarized the record as 20 hours of testimony and stated that "the work continues on developing the policy as part of HB 646." DeWine's May 27 order tied the freeze to the period while the committee studied data center growth, and on August 5 he removed the ambiguity by extending it through the end of his term regardless.

What the record does show is where the pressure points are. PUCO Chair Jenifer French told the committee that AEP Ohio reported in 2024 that it had received requests for more than 30,000 megawatts (MW) of data center load, and announced in February that it had signed 5,642 MW under the data center tariff PUCO approved in July 2025. The tariff requires collateral, a minimum demand charge, contracts of at least 8 to 12 years, and exit fees. Non-disclosure agreements (NDAs) drew criticism from residents and committee members. Holmes said NDAs were "causing a lot of the distrust and anxiety," and Workman told the tech lobbyists, "You're doing a terrible job actually selling your product on the public scale." Google's Liz Schwab countered that local governments "have all the local control and authority to determine how these projects or if these projects move forward." Committee members did not reach consensus on the exemption itself. Members pressed the companies on June 4 about tax incentives and electric and water use, and the Statehouse News Bureau's headline on that hearing was that questions were "left unanswered."

Why Ohio Hit Pause: The Numbers

The exemption's actual 2025 cost ran 11 times the forecast. Under Ohio Revised Code Section 122.175, data center projects investing at least $100 million over three years and paying at least $1.5 million in annual Ohio payroll can receive a partial or complete exemption from the state's 5.75% sales and use tax on eligible equipment. The terms are set in Tax Credit Authority agreements, some of which run into the 2050s. Exhibit 1 shows the gap between projections and actual cost in Ohio Department of Taxation data that Signal Ohio reported on May 21, 2026.

The governor's office and its critics read the same numbers differently. DeWine's announcement framed the $27.2 billion of 2025 capital investment as evidence that data centers are a "critical component to today's technology-driven economy." Policy Matters Ohio called the pause "a clear acknowledgment that something has gone seriously wrong" and urged lawmakers to examine "how existing commitments could be scaled back or restructured." The fight is not new. The legislature voted to end the exemption for new agreements in the June 2025 budget bill, DeWine vetoed the provision, and Speaker Matt Huffman (R-Lima) has said he lacks the votes to override. Six days after the Signal Ohio story, DeWine announced the pause, and Rep. Tristan Rader (D-Lakewood) introduced H.B. 957 the same day.

One last award was approved before the pause. At its June 1 meeting, the Tax Credit Authority approved a $42.3 million exemption for Cologix Inc. covering two Columbus-area projects in Delaware County and Johnstown, backed by $1.17 billion of investment and 90 full-time jobs by 2035. The governor's office treated it as already in process and therefore outside the pause. That award brings the state's committed exemption cost since 2025 to roughly $2.17 billion, and it is the last one the authority will consider until at least January 2027.

Three Scenarios: End, Cap, or Mend

Exhibit 2 lists each pending vehicle, what it would do, and where it stands.

The cap scenario reached the Senate floor in June. H.B. 646 passed the House 97-0 on March 18, 2026 as a modest study-commission bill. On June 9 and 10 the Senate Energy Committee rewrote it into a sweeping regulatory package, reported it 8-3, and leadership floated a floor vote the same day. It was recommitted within hours. The sticking point was the exemption: some House members wanted it eliminated outright rather than halved and objected to any bill that extended it in reduced form. The Senate will not reconvene before November, so the bill waits in Senate Energy until then.

The end scenario has bipartisan sponsors but no hearings. H.B. 957 carries one Republican cosponsor, Rep. Justin Pizzulli, alongside Rader and nine other Democrats. S.B. 374 is co-led by Republican Sen. Louis Blessing. Neither has been scheduled. Chavez has said the Kasich-era agreements cannot be undone, and the Department of Development told the committee that recent deals have generally been structured at a 50% exemption for 10 to 15 years.

The mend scenario has become a legislative drafting exercise. The Senate majority caucus has said the work continues as part of H.B. 646. H.B. 983, introduced July 28, pushes in the opposite direction from the industry: local voter approval, no local property tax incentives, and mandatory disclosure of every agreement.

The Election Changes the Math

Both major-party candidates for governor have called for restrictions, and neither has promised to lift the pause. Republican nominee Vivek Ramaswamy's three-part plan would require data centers to cover residential customers' electric costs through credits, pay full property taxes with no local abatement, and meet environmental standards, with a preference for brownfields over farmland. "If any one of these three conditions is not met, the data center won't be built. Period," he said, according to Signal Ohio. Democratic nominee Amy Acton proposes a conditional moratorium requiring companies to cover all costs, build with union labor, and site on brownfields. Whoever wins will also fill seats on PUCO, which approved the data center tariff, as its commissioners' staggered five-year terms expire.

What the Pending Bills Would Mean for Project Economics

No new exemptions will be awarded before a new governor is sworn in, and the legislature may rewrite the program before the queue reopens. On $500 million of exemption-eligible equipment, Ohio's 5.75% state rate alone is $28.75 million. The difference between a 100% and a 50% exemption is $14.4 million on a single phase. Sub. H.B. 646's 75% tier, available for brownfield sites and self-supplied generation, would restore $7.2 million of that on the same example.

Executed agreements are grandfathered in every pending bill. For holders, the exposure sits in compliance with the investment and payroll commitments and reporting in their agreements. Policy Matters Ohio has called for restructuring existing commitments, and Development Director Lydia Mihalik has suggested the state could try to renegotiate, though "they're going to make those decisions based on the best movement forward for their business."

Local property tax abatements are also in play. H.B. 646 would cap local abatements at 50%, H.B. 983 would eliminate local property tax incentives for data centers, and Ramaswamy's plan would end them as well. Exhibit 3 sets out the dates from the House vote on H.B. 646 in March through the handoff to a new governor in January 2027.

What to Do Now

This is for any company with a pending Ohio exemption application, an executed agreement, or a site decision that assumed the full exemption and a local abatement. The Tax Credit Authority will not consider new awards before January 2027, and the lame-duck session after November 3 is the current legislature's only window to act. If you want a read on fit before the General Assembly returns in November, reach out to our team.

References

1. Office of Ohio Governor Mike DeWine, Governor DeWine Announces Pause of Data Center Tax Exemption, May 27, 2026.
2. Ohio General Assembly, Joint Data Center Committee Mission Statement, May 27, 2026.
3. Ohio House of Representatives, Holmes, Chavez Announce Joint Data Center Committee, May 13, 2026.
4. Ohio Senate Majority Caucus, Ohio's Joint Data Center Committee Holds 20 Hours of Testimony: Here's What We Learned, June 18, 2026.
5. Jake Zuckerman, Ohio data center tax break cost $1.4 billion more than expected in 2025, Signal Ohio, May 21, 2026.
6. Andrew Tobias, 2 Ohio data centers get $42M tax break before pause, Signal Ohio, June 1, 2026.
7. Ohio Revised Code Section 122.175, Tax exemption for sale, storage, use, or other consumption of computer data center equipment.
8. The Statehouse News Bureau, DeWine: Ohio data center tax break is for next governor to decide on, August 6, 2026.
9. Sarah Donaldson, Ohio lawmakers introduce, may advance data center bill within 48 hours, The Statehouse News Bureau, June 9, 2026.
10. The Statehouse News Bureau, Tax break debate stalls new Ohio data center laws. What now?, June 11, 2026.
11. The Statehouse News Bureau, Questions left unanswered after big tech hearing on data centers in Ohio, June 4, 2026.
12. Ohio Capital Journal, Ohio lawmakers introduce sweeping new data center legislation, June 10, 2026.
13. Ohio Capital Journal, Ohio General Assembly members propose sweeping bill to regulate data center development, August 6, 2026.
14. Katie Millard, Ohio bill would end data center tax breaks, effective Oct. 1, NBC4 WCMH-TV, June 9, 2026 (updated July 1, 2026).
15. Ellen Essman, What's the state of data center legislation in Ohio?, Ohio State University Farm Office, June 25, 2026.
16. Policy Matters Ohio, Pause on data center tax break won't address soaring costs, May 28, 2026.
17. Ohio House of Representatives, Rep. Rader Introduces Companion Data Center Sales Tax Exemption Repeal Bill, May 27, 2026.
18. Ohio Legislature, House Bill 646, House Bill 957, House Bill 983, and Senate Bill 374, 136th General Assembly.
19. MultiState, State Data Center Policy Shifts as Governors Impose New Restrictions, June 22, 2026.
20. Maine Senate Democrats, Sen. Grohoski champions new Maine law excluding data centers from tax exemption programs, April 2026.

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