More than a decade ago, Ohio lawmakers exempted tech companies from paying sales tax on the computer servers and equipment that fill data centers. That break has since ballooned into one of the state’s most expensive. Now, Ohio joins a parade of states rethinking the sweetheart deals they gave Silicon Valley giants.
The Wall Street Journal reports that the exemption cost Ohio more than $1.5 billion last year, over 10 times what state officials originally estimated. The scale of it became public after the news outlet Signal Ohio reported on it, and voters were angry enough that Gov. Mike DeWine (R) paused new applications in May.
Democratic state Rep. Tristan Rader, who represents parts of Cleveland, wants to go further. He is pushing to repeal the sales-tax exemption entirely and renegotiate past deals with companies including Amazon, Meta Platforms and Alphabet’s Google. He also wants new data-center taxes and rules that would force developers to pay more toward power and electrical infrastructure.
“They seem to have more money than God and they’re able to build without the need for these types of incentives,” Rader said.
Ohio isn’t alone. In several states, exemptions granted to tech giants have topped $1 billion a year. Legislators or governors in more than 10 states, including Illinois, New Jersey and Washington, have pulled back on the tax breaks, and dozens more, including Texas, have proposed similar measures.
Tim Schram, who specializes in state and local taxes at the accounting firm BDO, said the shift happened fast. “It definitely happened in hyperspeed because of hyperscaling,” he said.
More than 35 states currently offer sales-tax exemptions or similar benefits to data-center developers. The stakes are large: sales tax on equipment often runs from six to seven percent, applied to hundreds of millions or billions of dollars worth of servers and hardware. Ohio’s effective tax rate on data centers, incentives included, stood at just 1.2 percent at the end of 2025, the lowest of 15 states analyzed by EY’s Quantitative Economics and Statistics team. California had the highest rate among those states, at 16.9 percent.
The math changed after ChatGPT launched in late 2022 and set off hundreds of billions of dollars in tech investment, making the exemptions worth far more than lawmakers had anticipated. New Jersey approved a half-billion-dollar tax credit for data centers in 2024 with a unanimous state Senate vote. Last month, the same chamber reversed course 35-4, canceling the remaining $250 million of that credit. Virginia, which has more data centers than any other state, recently passed a tax on the electricity data-center operators consume while keeping its sales-tax exemption for equipment intact.
Industry executives and advisers warn the reversals could push future projects toward Indiana, West Virginia and Wyoming, states that still offer favorable tax treatment. Ian Boccaccio of the tax firm Ryan said Ohio, Arizona and Illinois have already become less attractive after pausing or eliminating their exemptions.
The political risk extends to local officials. John Perkins, a city council member in Independence, Missouri, was recently voted out of office after backing billions of dollars in tax incentives for a data center. Recent polls show Americans overwhelmingly don’t want data centers built near them.
Steve DelBianco, chief executive of NetChoice, a tech-industry group that opposes regulation, acknowledged the shift. “Our industry has been knocked on our backfoot,” he said.
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Read more at the Wall Street Journal here.
Lucas Nolan is a reporter for Breitbart News covering issues of AI, free speech, and online censorship.