Ohio hits pause on datacenter tax breaks draining its coffers

The US state of Ohio has suspended tax breaks for datacenters, amid claims that the policy cost the state more than $1.5 billion in revenue during in 2025 alone. Ohio's Republican Governor Mike DeWine declared a pause in the state's server farm subsidy, directing its Tax Credit Authority to stop considering new datacenter sales tax exemption requests while officials review the industry's costs and impacts. According to the Associated Press, the amount of money involved in Ohio's tax break has ballooned, hugely exceeding earlier estimates, while opposition to the building of giant bit barns has also grown, as in other areas of the US that have become datacenter hotspots. Nonprofit research org Good Jobs First puts the cost of the sales tax exemption to the state at more than $1.5 billion in 2025, about 11 times the state's $136 million forecast. It cites figures from news network Signal Ohio, which found the figure had inflated from $555 million in lost revenue the previous year, which was itself four times more than the state government had forecast. However, the pause is only on the approval of new tax exemptions - those projects in operation that have already had their tax breaks rubber-stamped will continue to feel the benefit. The sales tax exemption granted by Ohio is understood to be generous, covering not only building supplies for construction of the data halls, but also the server racks, cooling facilities, and other infrastructure to fill them. According to Good Jobs First, the revelation means Ohio joins the small club of US states now losing more than $1 billion annually on tax breaks for cloud-hosting campuses. The other three are Virginia - the datacenter capital of the world" - Texas, and Georgia, where subsidies are projected to cost $2.5 billion this year. The organization has been agitating for greater transparency in the concessions afforded to datacenter operators for some time, claiming that in many cases, schemes which were supposed to attract investment and create jobs were resulting in taxpayers helping some of the richest corporations on the planet buy servers, equipment, and power infrastructure. Last November, it published a list of 36 states that exempt building materials and IT equipment for datacenters from sales and use taxes, yet only 5 states disclose estimated or actual total costs of those exemptions. In April, it upped the ante by claiming that many US states and local authorities are violating generally accepted accounting principles (GAAP) by failing to disclose revenue lost to bit barn tax subsidy schemes. One of those it pointed the finger at is Indiana, but the state has since come clean and confirmed the tax exemptions cost it $655 million annually. Most of that - $561 million - is going to Amazon Back in Ohio, a campaign has started to get a constitutional ban on datacenters that consume more than 25 MW of power. The group behind it, Ohio Residents for Responsible Development, claims to have gathered 25,000 signatures in five weeks. According to reports, communities in other parts of the US, including Nevada, California, and Maryland are planning to hold ballots on some form of datacenter ban in their areas as well. (R)