Ohio Lawmakers Debate Repealing Tax Breaks for Data Centers

Legislators from both parties consider ending over a decade of sales tax exemptions for data centers, citing lost state revenue and resource concerns.

Published on Feb. 18, 2026

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Ohio lawmakers are discussing the repeal of tax breaks for data centers that have been in place for over a decade. The state has granted sales tax exemptions to attract data center companies, but these tax breaks have cost Ohio millions in revenue annually. Some legislators argue it's time for data centers to pay their fair share, while others defend the exemptions as necessary to keep Ohio competitive in the technology sector.

Why it matters

The debate over data center tax breaks highlights the ongoing tension between economic development incentives and the need to generate sufficient tax revenue for public services. As data centers proliferate across Ohio, there are also growing concerns about their massive resource consumption, leading some communities to impose moratoriums on new construction.

The details

Ohio has granted data center companies sales tax exemptions for over a decade to attract economic development, but these tax breaks have cost the state over $141 million in revenue this year alone. Some lawmakers, like Democratic State Senator Kent Smith, argue "the most ridiculous tax break on the books currently is for data centers" and that "that tax break needs to end." However, Republican Governor Mike DeWine has defended the exemptions as necessary to keep Ohio competitive for technology jobs and investment. The legislature tried to repeal the exemptions last year but was blocked by DeWine's veto.

  • The Ohio legislature has granted data center sales tax exemptions for over a decade.
  • In 2022, the legislature tried to repeal the exemptions but was vetoed by Governor DeWine.
  • In 2023, lawmakers are likely to target the data center tax breaks again before the end of the current legislative session.

The players

Kent Smith

Democratic State Senator representing Euclid, Ohio, who argues the data center tax breaks need to end.

Mike DeWine

Republican Governor of Ohio who has defended the data center tax exemptions as necessary to keep the state competitive for technology jobs and investment.

Rob McColley

Republican State Senate President who said the removal of the data center sales tax exemption is "a very strong possibility" the Senate will pursue.

Casey Weinstein

Democratic State Senator representing Hudson, Ohio, who said data centers are "designed to be operated by as few people as possible" long-term, despite the upfront construction jobs.

Nickie Antonio

Democratic State Senate Minority Leader who said Ohio now has the "upper hand to negotiate" with data center companies, given the state's wealth of resources.

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What they’re saying

“The most ridiculous tax break on the books currently is for data centers. That tax break needs to end, for the benefit of everyone who's got an electric bill.”

— Kent Smith, State Senator

“Economic development is essential to Ohio's continued growth and prosperity as the heart of innovation, and the state must stay at the forefront of prospering fields such as technology and artificial intelligence. The availability of this tax exemption is important as Ohio competes with other states for technology jobs and capital investment.”

— Mike DeWine, Governor

“The removal of the sales tax exemption for data centers, the Senate put that in because we felt pretty strongly that the data centers already have a pretty good deal right now when they come to Ohio. It's a very strong possibility we would override that veto.”

— Rob McColley, State Senate President

What’s next

The Ohio legislature is likely to target the data center tax breaks again before the end of the current legislative session, with a strong possibility of overriding Governor DeWine's previous veto of the repeal.

The takeaway

The debate over data center tax breaks in Ohio reflects a broader tension between economic development incentives and the need to generate sufficient tax revenue to fund public services. As data centers become more ubiquitous, there are also growing concerns about their resource consumption that lawmakers are grappling with.