Ohio halts $1.6B data center tax break amid AI subsidy backlash

Ohio is pausing a major tax break for data centers after costs soared far beyond expectations. The decision comes as criticism grows over subsidies for energy-intensive AI facilities. Governor Mike DeWine’s office pointed to a new study and rising expenses as key reasons for the halt. The suspended tax incentive has played a vital role in attracting AI and tech companies to Ohio. But its financial impact has ballooned, reaching nearly $1.6 billion in 2025—far more than initially projected. Scrutiny over such breaks has intensified, with lawmakers and governors across the US questioning their long-term value.

Meanwhile, a citizen-led campaign is pushing for a permanent ban on new hyperscale data centers. Organisers must collect enough signatures by 1 July to place the issue on November’s ballot. If successful, the referendum would block future construction of large-scale facilities.

Business groups and unions have warned that ending the tax break could drive tech investments away from Ohio. They argue that the pause risks undermining the state’s growing reputation as a hub for AI infrastructure. DeWine, who supports data centers, has stressed that the suspension is temporary while officials review the programme’s effects. With DeWine term-limited, the final decision on reinstating the break may fall to his successor. The suspension leaves Ohio’s data center future uncertain for now. If the referendum qualifies, voters will decide whether to permanently block new facilities. The outcome could shape the state’s role in the expanding AI industry—and its approach to tax incentives for years to come.