Ohio freezes data center tax breaks amid AI facility backlash

Ohio has paused a major tax break for data centers, a move that could reshape the state’s tech industry. The decision comes as opposition grows against new AI facilities and their financial impact. Governor Mike DeWine, a supporter of data centers, temporarily halted the incentive to allow further review. The tax exemption, covering both construction materials and high-cost equipment, was key to attracting AI and tech investments. But its financial burden has surged—from an estimated £108 million in 2025 to nearly £1.3 billion in the same year. Critics argue the cost has spiralled out of control.

A citizen-led campaign is now pushing for a permanent ban on new hyperscale data centers. Organisers must collect enough signatures by 1 July to place the issue on November’s ballot. Meanwhile, a new legislative committee will study the impact of these facilities on local communities.

Business groups and unions have warned that suspending the tax break could drive tech investments to other states. The pause also follows broader national scepticism, with governors and lawmakers questioning similar incentives. With DeWine term-limited, the future of the tax break may depend on the next governor. The temporary halt gives Ohio time to assess the economic and social effects of data centers. If the referendum succeeds, the state could permanently block new hyperscale projects. For now, the pause leaves tech companies and investors in a state of uncertainty.