Ohio’s biggest tax break for data centers has been costing the state far more than forecasts indicated, according to updated “actuals” provided by the Ohio Department of Taxation.
The department said the data center sales tax exemption cost the state about $554.9 million in 2024 and about $1.5687 billion in 2025, figures that officials said show how quickly the incentive’s impact has grown alongside the industry’s expansion.
Tax exemption totals under the department’s biennial forecasts had previously been shared with the public at much lower estimates, according to the department’s spokeswoman Andrea Lannom. Lannom said the department was unable to provide calculated actuals before 2024 because “taxpayer confidentiality” restricted the information, explaining that fewer than 10 companies had claimed the exemption at the time.
Lannom also pointed to what she said was “significant growth in the data center industry and in the use of the data center exemption since the publication of the Tax Expenditure Report in November 2024,” a factor that she said complicated earlier estimates.
The debate over the exemption has been tied to how the state plans budgets for the next two years. The state’s operating budgets rely on predictions from the Department of Taxation, and in the most recent budget legislation lawmakers voted to end the data center tax break as a way to help finance an additional round of income tax cuts.
Gov. Mike DeWine vetoed the proposal, arguing that the tax exemption is needed to attract data center developers to Ohio. A DeWine spokesperson said the governor would review the new data from the Department of Taxation, but declined further comment.
In the Legislature, House Speaker Matt Huffman said he would like to gather the three-fifths vote required to override DeWine’s veto, but indicated he lacks the political support to do so. The updated figures, meanwhile, have fed criticism from a progressive economist, Zach Schiller of Policy Matters Ohio, who said the department’s earlier estimates had been lowballs—though Schiller also said he was surprised at how large the figures became.
Even Schiller’s concern has shifted from whether forecasts were wrong to what lawmakers can practically do now. In an interview, Schiller said he worried about whether Ohio is legally able to get out of long-term contracts with the developers tied to the exemption, or whether lawmakers will at least be able to halt new tax breaks.
Lawmakers have also moved to bring the issue into a public forum. Rep. Adam Holmes, a Muskingum County Republican who chairs a special legislative committee focused on data centers, said he did not have immediate knowledge about how or why the Department of Taxation’s numbers were so far off, but said the panel would soon take testimony from state officials.
Holmes said, “Let’s figure out what the heck is going on, and do it in a public forum,” adding that the tax break “needs to be explained.” Sen. Kent Smith, a Cuyahoga County Democrat on the committee, said the new figures show the exemption is among the most lucrative incentives offered by the state.
The issue also has broader context in Ohio and across the U.S., as data center growth has raised concerns tied to electricity demand, the on-site power systems some facilities use, and the amount of public subsidies compared with the number of jobs created after construction. The AP story cited a recent estimate by the Ohio Chamber of Commerce that data centers received $2.5 billion in public subsidies between 2017 and 2024, and said those facilities contributed $3.7 billion toward Ohio’s gross domestic product when counting direct and indirect inputs.
While lawmakers have not overridden DeWine’s veto of the exemption-ending bill, the new actual cost figures are now becoming central to how the state revisits the incentive—both for the current budget and for future decisions about whether and how Ohio will continue to attract data center investment.