Tax Exemptions Under Fire: States Reconsider Big Tech's Data-Center Boom

Big Tech companies Amazon AMZN, Meta Platforms META, and Google GOOGL are facing a growing backlash from states over tax exemptions that have fueled America's data-center boom. Over a dozen states are reconsidering these subsidies as lawmakers question whether the jobs and investment they attract justify lost revenue and grid costs.

Ohio is a prime example of this shift. The state once exempted servers and data-center equipment from sales taxes to lure in investment, but the policy has proven costly. Last year, AI pushed Ohio's annual cost above $1.5 billion, ten times the original estimate.

State Rep. Tristan Rader wants Ohio to repeal the exemption and renegotiate older agreements, requiring developers to pay more toward power infrastructure. Some contracts secured benefits lasting decades, making this financially and legally consequential for Amazon, Meta, and Google.

The resistance to tax exemptions is not limited to Ohio. Arizona and Illinois have paused or eliminated these benefits, while a Missouri council member lost reelection after supporting billions of dollars in data-center incentives. Despite this, more than 35 states still offer comparable benefits, leaving tech companies with alternatives if one market becomes less welcoming.