Ohio is putting a temporary halt on a major tax break used to attract AI data centers, signaling growing concern over the industry’s rising costs and community impact. Gov. Mike DeWine said the state would stop approving new applications while lawmakers study the issue.

The tax exemption became far more expensive than expected, climbing to nearly $1.6 billion in 2025 after state officials had projected costs close to $136 million. The incentive covers not only construction materials but also costly equipment like server racks and cooling systems.

At the same time, opposition to hyperscale data centers has intensified across Ohio. Residents are gathering signatures for a proposed statewide ban on new large-scale data centers, which could appear on the November ballot if organizers meet a July deadline.

DeWine still supports the industry and says billions of dollars in AI-related investments have benefited Ohio’s economy.