States Want to Pull Back Data Center Tax Breaks

States that once scrambled to woo data centers with generous tax breaks are now trying to put the brakes on the deals they helped create. The Wall Street Journal reports that Ohio's sales-tax exemption on data-center equipment has ballooned to more than $1.5 billion a year, over 10 times what lawmakers initially expected, thanks to the surge in AI-related infrastructure. After local outlet Signal Ohio highlighted the cost, GOP Gov. Mike DeWine froze new applications, and some legislators want to repeal the break outright and reopen long-term agreements with Amazon, Meta, and Google.

• "They seem to have more money than God and they're able to build without the need for these types of incentives," says Democratic state Rep. Tristan Rader.

Sen. John Husted, the former lieutenant governor DeWine appointed to finish JD Vance's term last year, is in a tight race with Democrat Sherrod Brown, and the data center issue could cost him votes, Ohio Capital Journal reports. At an energy-affordability summit last week, Husted said little about data centers and left without taking questions. GOP Sen. Bernie Moreno, Ohio's other senator, said he didn't want a single taxpayer dollar going to data centers. He called for a federal tax to cancel out state and local government tax incentives for data centers.

• "These data centers are going to come into our community and take our water and pollute our environment," Moreno told the summit. "They're going to raise our electricity prices. They're eventually going to put us out of work—and our taxpayer dollars are going to support the construction of these things," he said. "It's the worst sales pitch in the history of sales pitches."

Ohio isn't alone: more than 10 states, including Illinois, New Jersey, and Washington, have paused or scaled back incentives as residents balk at rising costs and the energy demands of these facilities, the Wall Street Journal reports. Tech groups warn that projects will simply migrate to more welcoming states such as Indiana or Wyoming, while industry advocates and political figures—including President Trump—are pressing voters to embrace data centers as economic engines