More than a dozen U.S. states suspend tax incentives for AI data centers

Dynamic Beating AI News: More than a dozen U.S. states are pausing, cutting, or reevaluating tax incentives for data centers. Over a decade ago, states offered tax exemptions to attract tech giants like Amazon, Meta, and Google to build data centers. As the AI construction boom took off, the scale of these incentives rapidly expanded, and several states discovered that actual costs far exceeded initial estimates. Ohio stands out as the most extreme case: the state’s sales tax exemption for data centers is projected to cost approximately $1.6 billion in 2025—about 11 times the original estimate of $136 million. Governor Mike DeWine has suspended approval of new data center tax exemption applications. However, some previously agreed-upon incentives signed by Amazon, Meta, and Google can last for decades, and state legislators are now pushing to renegotiate terms or impose new taxes. New Jersey has canceled $250 million in AI and data center tax credits that had not yet been disbursed. Virginia is retaining its sales tax exemption on equipment but has introduced a new electricity consumption tax of $0.011 per kilowatt-hour for certain data centers starting July of this year.