Governor DeWine Pauses Data Center Tax Breaks Amid Budget Crisis

Governor Mike DeWine directed the Ohio Tax Credit Authority to pause new sales and use tax exemption requests for data centers effective June 1, 2026. The decision follows reports from the Ohio Department of Taxation that the incentive program cost the state between $1.5 billion and $1.6 billion in 2025, nearly 12 times the original budget estimate of approximately $136 million.

While DeWine maintains that data infrastructure is critical for innovation and noted $27.2 billion in capital investment in 2025, the move coincides with a study by the bipartisan Joint Select Committee on Data Centers. This committee is investigating the industry's impact on water usage, land, wildlife, and national security, as well as the use of non-disclosure agreements between developers and local governments. Public hearings held in early June highlighted concerns over noise pollution and whether residential ratepayers will subsidize power grid upgrades.

Legislative leaders have reacted with frustration. Ohio House Speaker Matt Huffman and State Senator Bill Blessing have characterized the breaks as corporate welfare, with Huffman pushing to override DeWine's previous vetoes to eliminate the incentive entirely. Simultaneously, grassroots groups like Conserve Ohio are collecting signatures for a November ballot initiative to ban hyperscale data centers consuming more than 25 megawatts per month.

In response to the scrutiny, the Data Center Coalition has expanded its presence in Columbus, hiring at least 51 lobbyists and utilizing its nonprofit arm, Connected Ohio, to promote the industry's economic benefits.