Ohio Legislature Fails to Reach Data Center Tax Deal Before Recess
Ohio lawmakers couldn’t agree on reducing data center tax breaks before summer break, leaving $1.57 billion in exemptions unchanged.
COLUMBUS, OHIO — Ohio lawmakers left for summer recess Wednesday without passing new data center regulations, unable to reach agreement on Substitute House Bill 646, which aimed to modify tax incentives for technology companies.
The House and Senate lacked sufficient votes to approve the legislation, which proposed reducing sales tax exemptions for data center projects from the current 100% to 50%. The measure sought to establish new rules and standards for the expanding tech facilities across the state.
Tax Exemption Debate Intensifies
“We don’t think we should be granting tax exemptions to multi-billion dollar corporations, especially when many of them are already coming here to build these data centers anyway, because of the contract that was entered into several years ago,” said Ohio House Speaker Matt Huffman, R-Lima.
The proposed changes would not affect existing contracts with major companies including Meta, Google, and Amazon. State Sen. Kent Smith, D-Euclid, noted these agreements span decades and cover a significant portion of the market.
“If we pull the tax percentage back from 100% to 0%, 76% of the market is not affected because of these deals that those three signed in the Kasich administration,” Smith said.
Billion-Dollar Tax Impact
Data from the Ohio Department of Taxation reveals the state provided almost $1.57 billion in sales-tax exemptions on data center equipment and construction materials purchases last year. This figure represents nearly 12 times what state officials initially projected, according to estimates produced by the tax department in late 2024 during Ohio’s budgeting process.
The General Assembly previously passed legislation eliminating the data center sales tax exemption entirely in the last budget, but Governor Mike DeWine vetoed the measure. Lawmakers have spent months debating whether to override his decision.
When asked if the proposed 50% reduction was sufficient or if he would continue pushing for a veto override, Huffman expressed doubt about the feasibility of such action.
Labor Opposition Complicates Override Efforts
“Well, I don’t think it’s practical and perhaps even possible at this point to get a veto override,” Huffman responded. He indicated that labor unions oppose an override, preventing enough members from voting to supersede the governor’s veto.
Huffman appeared willing to accept a 50% exemption, provided data centers comply with regulations designed to “incentivize good behavior.”
The failed legislation included environmental provisions addressing water usage concerns raised by advocacy groups. The bill would have required facilities to utilize closed-loop water systems or implement “best practices for water conservation and efficiency.”
Additional requirements included mandatory reporting of any “anomalies” detected through water monitoring systems at the facilities.
