Ohio has emerged as one of the nation’s top states for data centers, with nearly 200 facilities already operating and dozens more proposed or under development. While state leaders have promoted these projects as economic drivers, recent analyses show the associated tax incentives are costing taxpayers significantly more than initially projected, raising questions about the long-term value for Ohio residents, especially in south and south central communities.
Generous Incentives Drive Growth
Ohio’s primary incentive is a sales tax exemption on computer data center equipment and construction materials, established in 2013 under Ohio Revised Code Section 122.175. Qualifying projects typically require at least $100 million in capital investment over three years and an annual payroll of $1.5 million. The exemption can be full or partial and applies to both state (5.75 percent) and local sales taxes.
Additional breaks often include local property tax abatements (commonly 75 percent for 15-30 years) and job creation tax credits. From 2017 to 2024, Ohio provided an estimated $2.5 billion in such incentives for data center projects.
Major tech companies like Amazon (Vadata), Google, Microsoft, and Meta have secured these deals. For example, a Microsoft project in Licking County received approval for a 15-year exemption worth an estimated $72.5 million for a $1 billion investment expected to create just 20 jobs.
Costs Balloon Beyond Projections
Initial estimates understated the fiscal impact. The state’s tax expenditure report projected $127.4 million in forgone revenue for one recent fiscal year. However, new figures from the Ohio Department of Taxation indicate the sales tax exemption alone cost about $555 million in 2024 and is expected to approach $1.6 billion in the current period when including recent large-scale commitments.
Analyses show costs often exceed $1 million per direct job created. One review of 13 agreements found nearly $5.1 billion in investment yielding only 356 jobs. Including local taxes, losses exceeded $343 million for those projects.
An industry-backed report for the Ohio Chamber of Commerce Research Foundation noted data centers generated $5.2 billion in state and local tax revenues from 2017-2024, suggesting a net positive return of roughly $2 for every $1 in incentives. Even so, the high per-job cost and strain on public resources remain points of contention.
Impact on South and South Central Ohio
While the heaviest concentration sits in central Ohio around Columbus (with over 100 facilities), development is spreading. Projects appear in areas like Fayette County (Amazon), Pickaway County, and other southern corridors. South and south central Ohio residents may feel effects through utility infrastructure demands, land use changes, and potential shifts in local tax bases, even if direct facilities are fewer.
Data centers consume massive electricity and water. A single large facility can use power equivalent to a mid-sized city. Concerns include higher electricity rates for households and businesses if infrastructure costs are not fully covered by operators. American Electric Power and other utilities have addressed grid capacity, with some regulatory cases examining cost allocation.
Fast-Tracked Proposals and Public Pushback
Ohio hosts around 200 data centers, ranking among the top five to six states nationally. Estimates suggest 70-80 additional facilities could come online by 2030, with many in advanced planning stages. Some communities have considered or enacted moratoriums, while ballot efforts seek greater restrictions or voter approval for large projects.
Lawmakers from both parties have introduced measures to limit new sales tax exemptions, require data centers to cover more infrastructure costs, and increase transparency. Governor Mike DeWine previously vetoed a provision ending the exemption for future projects. Bipartisan discussions continue on accountability.
Balancing Economic Benefits and Taxpayer Costs
Proponents highlight capital investment (tens of billions statewide), construction jobs, and indirect economic activity. Critics, including groups like Policy Matters Ohio and the Ohio Consumers’ Counsel, argue the subsidies primarily benefit wealthy corporations while shifting long-term costs, such as grid upgrades, to everyday Ohioans.
For south and south central Ohio, the debate centers on sustainable growth. Local leaders must weigh potential revenue and jobs against impacts on agriculture, utilities, and community character. Greater transparency in exemption agreements, public reporting of energy and water use, and assurances that ratepayers do not subsidize corporate expansion could help address concerns.
As Ohio navigates AI-driven demand for data infrastructure, lawmakers, utilities, and residents will determine whether current incentives deliver broad benefits or require reform to protect taxpayers. Ongoing legislative efforts and potential ballot measures in 2026 may shape the state’s approach for years to come.
