Gov. Mike DeWine is halting new sales-tax breaks for data centers, telling the Ohio Tax Credit Authority to hold off on considering new incentive requests while state lawmakers study the industry’s explosive growth.
The move follows separate reporting by News 5 and Signal Ohio showing the state is giving up much more tax revenue than officials originally predicted.
RELATED: Calls for change as Ohio sales-tax break for data centers approaches $1.6 billion a year
New figures from the Ohio Department of Taxation show the state provided almost $1.57 billion in sales-tax exemptions on purchases of data center equipment and construction materials last year.
That’s nearly 12 times what state officials initially expected, according to estimates produced by the tax department in late 2024 as part of Ohio’s budgeting process.
Those numbers don’t include the value of local sales-tax breaks for data center projects, which totaled $446.3 million last year, according to tax department calculations.
In a statement Wednesday afternoon, DeWine called data centers “a critical component to today's technology-driven economy, which depends on the virtual, large-scale exchange of information.” He said robust technology infrastructure helps Ohio attract other businesses and jobs.
The governor also noted that data center companies receiving sales-tax breaks reported capital investments of $27.2 billion last year.
As the governor takes action, a joint legislative committee in Columbus is digging into the potential benefits and harms associated with data centers. That committee held its first hearing on Wednesday.
RELATED: As more Ohio towns temporarily block data centers, lawmakers move to study the impact
"I fully support the Ohio General Assembly's work to study the issue and bring forward facts about data centers, including the local benefits to communities when tax exemptions are granted,” DeWine said in his written statement. “As this work is ongoing, I believe it is appropriate for the Ohio Tax Credit Authority to pause its consideration of new data center tax exemptions while the full impact of data center growth in Ohio is being reviewed.”
The governor’s decision doesn’t impact existing sales-tax exemptions for tech firms, including Amazon, Google, Microsoft and Meta, the parent company of Facebook and Instagram. And the Ohio Tax Credit Authority will still consider one pending request for a sales-tax break at its June 1 meeting.
But companies will not be able to request and receive new sales-tax breaks — for now.
The General Assembly tried to scrap the data center exemption last summer, as part of a budget bill. But the governor vetoed that move, citing the need for high-tech jobs in Ohio and billions of dollars in construction work created by data center projects across the state.
House Speaker Matt Huffman, a Lima Republican, has said repeatedly that the legislature ought to override DeWine's veto. On Wednesday, before DeWine pushed pause on new tax breaks, Huffman reiterated his view that the tax break is unnecessary, at this point.
"Whether it's $20 million or $1.2 billion, my position is the same," he told reporters at the statehouse.
Other state lawmakers, on both sides of the political aisle, echoed that stance.
Sen. Kent Smith, a Euclid Democrat, said putting new incentive deals on hold isn't good enough.
"Governor DeWine's decision to pause the data center tax break is an admission that, under his watch, this tax cut for billion dollar companies got out of control," Smith said in a written statement.
He urged his colleagues to move quickly to overturn the governor's veto and end the program entirely.
Smith and Sen. Louis "Bill" Blessing III, a Hamilton County Republican, are behind a standalone bill to scrap the tax credit program. On Wednesday, Rep. Tristan Rader, a Lakewood Democrat, introduced a companion bill in the House.
"Governor DeWine never should have reinstated this exemption in the first place after it was eliminated in last year's budget," Rader said in a written statement. "Ohioans are tired of a tax system that shifts the burden onto working families while the wealthiest continue to receive special treatment."
Rep. David Thomas, an Ashtabula County Republican, said the legislature only learned about the sharp jump in forgone tax revenue through media reports.
"I am strongly encouraging removing this sales tax exemption fully in Ohio law," Thomas wrote on social media. "It is unnecessary and hypocritical if we do not have this exemption for Bob & Betty Buckeye."
Michelle Jarboe is the business growth and development reporter at News 5 Cleveland. Follow her on X @MJarboe or email her at Michelle.Jarboe@wews.com.
