More than ten states have paused or cancelled data center tax exemptions as community residents express their opposition to data center development. 

More than ten states are reversing billions of dollars in tax breaks that were meant to incentivize data center development as communities express more opposition to their construction. 

Amazon, Meta, and Google have taken advantage of the tax breaks to build data centers across the country. Residents have become more opposed due to concerns over the facilities’ electricity and water consumption driving up utility bills. 

The incentives are extremely attractive to companies building data centers. A sales tax break on equipment alone is a massive share of both project and ongoing costs for the facilities. 

Ohio has joined the growing list of states that are pausing or cancelling data center tax exemptions in the midst of public pushback. 

More than ten years ago, Ohio lawmakers exempted computer servers and other data center equipment from sales taxes to drive up technology investment in the state. As the artificial intelligence boom made Ohio a hotspot for data center development, the cost of those exemptions reached more than $1.5 billion in 2025. 

The steep total for the exemptions in 2025 was more than ten times the state’s original estimate, according to data. 

In May, Governor Mike DeWine (R-Ohio) paused new applications for the exemption. More than 35 states offer sales tax exemptions or other similar benefits to data center developers. Illinois, New Jersey, Washington, and others have paused those tax breaks. 

“Data centers are a critical component to today’s technology-driven economy, which depends on the virtual, large-scale exchange of information. One of the reasons Ohio has been so successful in attracting new businesses and creating new jobs is that we have invested in the data infrastructure needed to support complex technological innovation,” said Governor Mike DeWine in a statement when he announced the pause of the exemptions. 

“I believe it is appropriate for the Ohio Tax Credit Authority to pause its consideration of new data center tax exemptions while the full impact of data center growth in Ohio is being reviewed,” the governor continued. 

Including the incentives, Ohio’s effective tax rate on data centers was 1.2% as of the end of 2025. It was the lowest of 15 states analyzed in a recent study. 

The pause of tax exemptions across the country comes as voters are loudly voicing their opposition to the facilities being built in their communities.