Ohio Democrats Push to Rein In Data Center Growth, Eliminate Tax Breaks
– Ohio Senate Democrats have introduced legislation aimed at increasing oversight of data centers and potentially eliminating the tax breaks that have fueled their rapid expansion across the state. The proposals come as concerns mount over the industry’s impact on local resources, energy demands, and rising costs for residents.
The bills seek to eliminate sales tax exemptions on construction materials used for data center projects, require developers to cover infrastructure costs, and impose greater oversight on future developments. Senate Minority Leader Nickie Antonio explained the motivation behind the legislation, stating, “We want to make sure that no Ohio community feels compelled to accept a facility that raises their utility costs or strains local resources against the express will of the residents.”
The move reflects a growing national trend of skepticism towards data centers, facilities that house the servers powering much of the digital world. Throughout the country, communities have voiced opposition to new projects, citing concerns about power and water usage. According to a report from Heatmap News in 2025, approximately 25 data center projects were shelved nationwide.
In Ohio, several large-scale data center investments have faced setbacks in recent months. Microsoft paused a $1 billion investment in three Central Ohio data centers last spring, and a company called Sentinel halted a $1 billion project in West Jefferson last October due to difficulties securing sufficient power. More recently, residents of Mt. Orab gathered in large numbers to express concerns about a proposed 1,000-acre project, leading a city council member to introduce a measure to temporarily halt all data center development within the city limits.
The proposed legislation isn’t solely a Democratic effort. Republican lawmakers are also considering ways to address the issues surrounding data center development. State Reps. Gary Click (R-Vickery) and Kellie Deeter (R-Norwalk) have proposed establishing a “Data Center Study Commission” to examine the impact of the roughly 200 data centers currently operating in Ohio.
The current tax structure allows data centers to avoid paying sales tax on construction materials, a significant benefit for companies building massive server facilities. Ohio state senator Kent Smith (D-Euclid), a leading proponent of the changes, argues that ending this exemption is crucial. “We’ve got to do something about the power demands associated with data centers, and we should also pare back this huge tax giveaway that quite frankly is going to billion-dollar corporations anyway,” Smith said.
However, the path forward for these bills is uncertain. Governor Mike DeWine vetoed a similar measure during budget negotiations, signaling potential resistance to significant changes in the state’s approach to data center incentives. The debate highlights the tension between attracting large-scale investment and protecting the interests of local communities.
Policy Matters Ohio released a report in January 2025 detailing the substantial revenue losses associated with the tax breaks offered to data center operators like Amazon, Google, and Microsoft. The report suggests the exemption could siphon significant funds from state and local governments.
Data centers in Ohio have already received $2.5 billion in state and local tax incentives between 2017 and 2024, according to industry-backed reports. As the demand for data storage and processing continues to grow, the debate over how to balance economic development with community concerns is likely to intensify in Ohio and across the nation.
