The cost of Ohio’s sales tax exemption for data centers surged to $1.6 billion in 2025, state tax officials disclosed this week, far above the $136 million budget forecasters had assumed when the break was adopted. The new actual-cost figures — released by Ohio Department of Taxation spokesperson Andrea Lannom — show the exemption also erased an estimated $555 million in state revenue in 2024, four times the initial expectation, plus another $166.8 million in local sales taxes that year.
The exemption, which waives Ohio’s 5.75% statewide sales tax on equipment and construction purchases by data center operators, was designed to attract hyperscale computing investment to the state. It has done so: Meta (Facebook), Alphabet (Google), and Amazon have all built or are building massive facilities in Ohio warehouses. But the revenue loss has rapidly outpaced official projections, a discrepancy that Lannom’s data makes stark.
In dollar terms, the exemption’s cost grew roughly 188% from 2024 to 2025, even as the underlying tax rate remained unchanged. The original estimate for 2025 — $136 million — was not merely imprecise; it was an order of magnitude smaller than the actual $1.6 billion in forgone receipts. The tax department’s forecasts, which are published biennially, have been widely criticized as severe understatements that mask the true fiscal impact of the incentive program.
Critics argue the projections have consistently lowballed the exemption’s appetite, leaving lawmakers and the public without an accurate picture of the trade-off as the AI-driven data-center boom accelerates. Proponents of the exemption say it has cemented Ohio’s position as a hub for cloud computing and artificial intelligence infrastructure. The new figures are likely to fuel calls in the state legislature for tighter reporting requirements or caps on the tax break, as well as renewed scrutiny of similar incentive packages across the country.