The cost of data center sales tax exemptions for public education
Good Jobs First & Policy Matters Ohio
This report was completed with the generous support of the State Power Fund.
Executive Summary
Ohio’s data center sales and use tax exemption cost the state almost $1.6 billion in forgone revenue in 2025. Approximately $374 million of that forgone revenue could have supported Ohio traditional public schools. That amounts to about $262 per student in traditional public schools.[1]
These numbers illustrate how state lawmakers prioritize corporations over public schools, and the scale of the education funding Ohio loses by maintaining the exemption. This one subsidy would have been enough revenue to completely close the school funding gap, had it been collected and directed to schools through the Fair School Funding Plan. Even if the additional revenue was distributed in the same portion that the FY25-26 budget funded these schools, it would have been a significant boost to classrooms across Ohio.
What are “traditional public schools?”
Traditional public schools are K-12 schools that are funded with taxes, tuition-free, operated by local school districts, and governed by local school boards. They do not include public charter schools, private schools, including private school scholarships, and career and technical education.
What is the “Fair School Funding Plan?”
The Fair School Funding Plan (FSFP) is a bipartisan approach to school funding based on the actual cost of educating every child, including those who need different or additional support.
The FSFP was designed to phase in over six years. After four years, Ohio legislators abandoned the plan and returned to the practice of funding schools based on what they were willing to spend, not the actual cost of educating Ohio’s children.
Are Ohio’s public schools underfunded? By how much?
In the current biennial state budget, legislators underfunded Ohio’s public schools by $2.75 billion.
Skyrocketing costs of the Ohio data center sales and use tax exemption
The price tag for Ohio’s data center tax breaks is skyrocketing, largely because they were designed for an earlier era of smaller data centers and are ill-equipped for the explosion of hyperscale facilities across the state. Ohio created its data center sales and use tax exemption program in 2013. Since then, the state has signed agreements with the largest technology companies—Amazon, Google, Meta, and Microsoft.[2]The agreements provided data centers with a 100% sales tax exemption on purchases of equipment and construction materials. The exemption covers both the state and local shares of the tax.[3]
In practice, the amount of subsidy is tied directly to company investments: the more a company spends on building and equipping the data center, the larger the subsidy becomes.
The Ohio Tax Credit Authority decides how long the agreements will last; it gave Amazon, Meta, and Google agreements lasting 40 years, as long as companies deliver on their promised levels of investment. As of June 2026, the state had 21 agreements in place.[4]
Some of the agreements with the largest companies were signed between 2014 and 2018, before public officials had imagined hyperscale data centers. Because some of these agreements are statewide (rather than tied to one location) and open-ended, the cost of the subsidy skyrocketed when companies began investing billions of dollars in AI data centers. In other words, the state provided a blank check to the richest corporations in the world.
Amazon’s original statewide contract, for example, was signed in 2014 and allows the company to receive the subsidy for 40 years. When the contract was signed, the state agreed to provide Amazon with an estimated $77 million in sales tax breaks in exchange for $1.1 billion in investment.[5] In late 2024, the company announced an additional $10 billion investment and said it would invest a total of $23 billion by 2029.[6] Disturbingly, the added subsidies that come with that spending were not disclosed and did not require separate approval. Policy Matters Ohio estimated the actual Amazon subsidy might be 20 times more expensive than originally estimated.[7]
In its biennial tax expenditure report, the Ohio Department of Taxation estimated that the program would cost the state $136 million in forgone revenue in FY 2025.[8] Policy Matters Ohio warned that the Department’s estimate was understated and did not account for the large expansions Amazon and Google had announced, and said the exemption could end up costing closer to $1.6 billion.[9]
In May 2026, the Ohio Department of Taxation calculated that the exemption had cost in fact almost $1.6 billion in 2025 alone, more than eleven times the original projection.[10] This amount only includes the state rates of sales tax losses and excludes the costs of local sales tax exemptions – meaning the true cost of the program in 2025 was closer to $2 billion.[11] In response, Gov. DeWine paused the exemption for new deals. However, the agreements that are in place, including the long-term ones with Amazon, Meta, and Google, are not affected, allowing companies to keep receiving the unlimited subsidy.
Tax revenue losses for traditional public education
If data center companies actually paid the sales and use tax instead of receiving exemptions, the additional revenue would flow into the state’s general budget. Had the state distributed that additional revenue to schools in the same proportion it did in the last budget that would provide approximately $374 million in potential new revenue for traditional public schools, or about $262 per student per year. (The methodology appendix explains how we arrived at these figures.)
To put it in perspective: In the last biannual budget cycle, legislators underfunded public schools by $2.75 billion: $1.4 billion in FY 2025 and $1.35 billion in FY 2026.[12] The $1.6 billion cost of this data center tax break in 2025 exceeded the annual shortfall and could have fully funded and updated the Fair School Funding Plan.[13]
Providing $1.6 billion a year in tax breaks to the data center industry is a policy choice. In making it, Ohio lawmakers are prioritizing tax breaks for some of the world’s most profitable corporations over fully and fairly funding Ohio’s traditional public schools, which educate the vast majority of the state’s children.
Impact on jobs
Ohio’s data center sales and use tax exemption does not require companies to create a specific number of jobs. Rather, subsidy agreements must include only $1.5 million in annual payroll.[14] Policy Matters Ohio estimated that 13 data center projects committed to creating just 356 jobs in total through their tax exemption contracts.
In their original 2014 to 2018 contracts, Meta was required to create 50 jobs, Google 30, and Amazon 120.[15] One article estimated the subsidy cost at $12 million per job at Meta’s data center and $30 million per job at Google’s.[16] At minimum, Ohio policymakers should require robust guarantees for job creation before considering any tax exemption.
A second problem is that there is no real way to measure how many jobs these projects have actually created. Since Ohio does not adequately track job numbers associated with those projects, whether permanent or construction, it is difficult to understand the jobs impact accurately.
What we do know is that while permanent job creation is comparatively small in number, data centers do generate meaningful construction and skilled maintenance jobs, driving apprenticeship growth across the state. Building a hyperscale facility can take years, and ongoing updates, upgrades, and renovation provide predictable skilled maintenance work for construction trades.
A word of caution: Job growth alone does not justify the billions in public assistance going to these megaprojects, nor does it offset the potential costs and the real concerns about transparency, siting, and environmental harms.[17]
Traditional public schools lose revenue through local tax breaks, too: A look at the Amazon data center in Wilmington
Beyond the sales tax exemption, schools across Ohio are losing tax revenue to data centers through other kinds of tax breaks.
One is the Community Reinvestment Area (CRA) program, which can provide companies with property tax abatements of up to 100% for up to 30 years. The Wilmington City Council is considering such deal with Amazon. Under the deal, Amazon would not pay any real property taxes to local government, depriving local school districts of revenue they would ordinarily receive, and instead for 30 years Amazon would pay a fee called PILOT, or payment in lieu of taxes. This fee will equal 30% of the real property tax the company would normally pay,[18] in effect giving Amazon a 70% property tax break for three decades.
On the public school side, Wilmington City Schools will receive just 44%[19] of the annual PILOT payment, but there is no set minimum payment. Instead, it works like this: the company projects an investment of $4 billion, but it is not required to make that investment, only to make “good faith efforts” to do so.[20] This investment promise is not tied only to land and buildings, which will be used to calculate the PILOT fee. The investment also includes investment in equipment, such as chips and generators, which are not taxed at all in Ohio. If the company invests billions in real property like land and buildings then the property tax bill would be substantial, and so would the school portion of the PILOT fee. But if real property value does not come in as expected, or is lower than assumed, the school share will also be less than expected. Because of this, Amazon’s PILOT essentially provides Wilmington’s schools with less money than would otherwise be available through property taxes—with the possibility of an even greater hit to school budgets if the land and buildings in town turn out to be less valuable than the city initially thought.
As mentioned above, this lucrative subsidy comes on top of another loophole written into Ohio’s tax code: the state does not tax corporate tangible property, which means the equipment that goes into data centers, such as chips, generators, and cooling systems, is not taxed. This represents significant savings for data center companies, because equipment, and chips in particular, makes up the bulk of their expenses and of the value of the property at these projects. With this loophole, Ohio is leaving millions of dollars on the table that could otherwise go to public schools.
Policy recommendations
Last budget cycle, lawmakers told Ohioans that fully implementing the bipartisan plan to bring public school funding into constitutional compliance was an unsustainable “fantasy.”[21] Yet, at the same time, the state gave up billions in revenue in the form of data center tax breaks to some of the most profitable corporations on the planet.
The sales tax exemption alone resulted in nearly $1.6 billion in state sales tax revenue losses to data centers in 2025. This revenue alone would have closed that gap between what the state sent to school districts in FY 2026, and what they actually should have received under the Fair School Funding Plan that year.
As lawmakers return to close out this General Assembly, they have a final opportunity to realign their priorities to put Ohioans before corporate special interests.
1. Permanently end the data center sales tax exemption.
The General Assembly should repeal the exemption for new agreements and make Gov. DeWine’s temporary pause permanent.
2. Rein in existing agreements and recover lost revenue.
While crucial for new projects, repealing the sales and use tax exemption would not address the billions of dollars in subsidies already committed under existing agreements with Amazon, Google, Meta, and other companies. Whatever mechanism it chooses, the General Assembly must rein in the cost of these tax breaks for existing projects.
As Policy Matters Ohio has advocated,[22] one way to recover soaring costs of these expensive deals is for lawmakers to impose a tax on data center equipment – a tangible personal property tax – unless data center companies with existing deals agree to give up or meaningfully renegotiate the agreements.
Ohio had this tax until 2009, and most states still do, including several of Ohio’s neighbors. Virginia, which has the largest concentration of data centers in the country, allows counties to tax data center equipment. This authority has created an important revenue source for Loudoun County, which sets the tax quite high and is expected to yield nearly $800 million in FY 2026.[23] If Ohio reinstated the tax, the revenue could be divided between schools, local governments, and the state.
3. Shield public school revenue from property tax abatements.
Data centers should not receive local property tax breaks at the expense of public schools. Lawmakers can consider prohibiting data centers from accessing Community Reinvestment Area, Tax Increment Financing, Enterprise Zone, and other tax abatements. Maine, for example, prohibited data centers from accessing local property tax exemptions.[24] Alternatively, lawmakers could exclude school tax revenue from abatements, as Alabama does.[25]
At minimum, school boards should hold approval authority over every proposed subsidy deal, regardless of the exemption percentage or length. Any payments in lieu of taxes should include binding minimum payments rather than uncertain projections.
4. Require robust transparency and accountability standards
Ohio should require robust company reporting and full transparency, including public disclosure of subsidy recipients, corporate parents, facility location, actual state and local tax breaks, fiscal impacts on affected school districts, jobs promised and created, wages by job type, company actual investment, compliance issues, and clawback actions. Company reporting and transparency should also cover data centers’ energy and water consumption, including impacts on wastewater.
Lawmakers should also end the use of Non-Disclosure Agreements, or NDAs, in economic development. Those agreements limit public access to basic information about projects that will impact their communities for years to come.
5. Require data centers to pay their full costs and protect the environment.
Data centers should pay the full costs of infrastructure development needed to meet their skyrocketing energy demand. Lawmakers should consider requiring data centers to use renewable energy and reducing restrictions on renewable energy generation.
Communities deserve better deals that prioritize community engagement and participation, while protecting public revenue, health, and the environment. Data centers should pay their fair share as they rely on the Ohio labor force, water, and power resources that make the state so attractive for this type of development.
Appendix 1: Methodology
Subsidy costs
On May 21, 2026, the news outlet Signal Ohio reported that, according to the Ohio Department of Revenue, the state’s sales tax exemption for data centers cost $1,568,700,000 in lost revenue in 2025. This figure reflects only lost state sales tax revenue, and it is the cost we describe throughout this analysis as $1.6 billion.
Share of funding for traditional public schools
In Ohio, sales and use tax revenue goes into the state’s general revenue fund. None of it is set aside for education. Schools are instead funded through budget decisions made by lawmakers.
To estimate how much of the forgone data center revenue might have gone to traditional public schools, we calculated the share of the state’s general revenue spending they receive.
We first estimated the school districts’ share of foundation funding. We did this by removing foundation funds that do not come from general revenue, namely sports gaming revenue and lottery funds. We then calculated the portion of all general revenue foundation funding in 2025 that went to traditional school districts, as opposed to charter schools, private school scholarships, and other programs. We estimate that the share was about 73.5%.
Next, we applied the schools’ share to the number we calculated. We assumed the general revenue portion is divided among students in the same proportions as total foundation funding. Applying the 73.5% gave us almost $7 billion in general budget funding for traditional school districts.
Finally, we divided that $7 billion by the state’s total 2025 general revenue budget of about $29.3 billion. The result is that traditional public schools receive about 23.9% of general budget spending.
We therefore treat 23.9% of the forgone revenue associated with data center sales tax exemption as the share that might have gone to traditional public schools.
Sources: The figures we used come from documents published by the Ohio Legislative Service Commission, including its Green Book analysis of the education budget and its Catalogue of Budget Line Items, which identifies where each funding for each line item comes from.
Enrollment calculations
To estimate the number of students in Ohio’s traditional public school districts for 2025, we used “enrolled ADM,” or Average Daily Membership, numbers.
Our numbers come from information the Ohio Legislative Service Commission (LSC) provided to Policy Matters Ohio during the last state budget process. The document shows 1,426,711 students enrolled in the traditional public schools in 2025; it also includes enrollment figures for each school district.
We checked that number against three official sources from the Ohio Department of Education and Workforce (ODEW):
- The June 2025 school district payment report
- The August 2025 school district payment report
- The ODEW School District Profile Report, or the Cupp Report
All three came in at about 1.42 million students, close to the figure we received from LSC. The small differences between the sources, which vary 0.0025% between the largest and smallest ADM numbers, do not meaningfully change our results.
For detailed calculations, please contact Policy Matters Ohio or Good Jobs First.
Appendix 2: District data
[1] Using 2025 enrollment.
[2] Ohio Department of Development. Department of Development Tax Incentives [Data set]. Data.Ohio.gov. https://data.ohio.gov/wps/portal/gov/data/view/department-of-development-tax-incentives
[3] Ohio Rev. Code § 122.175. https://codes.ohio.gov/ohio-revised-code/section-122.175
[4] Mihalik, L. (2026, June 11). DOD Supplemental Information. Select Committee on Data Centers, Ohio House of Representatives. https://ohiohouse.gov/committees/select-committee-on-data-centers/meetings/cmte_h_data_centers_1_2026-06-11-1000_1440
[5] Ohio Department of Development. Department of Development Tax Incentives [Data set]. Data.Ohio.gov. https://data.ohio.gov/wps/portal/gov/data/view/department-of-development-tax-incentives?visualize=true
[6] Associated Press. (2024, December 17). Amazon investing another $10 billion in Ohio-based data centers. AP News. https://apnews.com/article/amazon-aws-ohio-data-center-investment-1e5fcede2f64bb58e07e64af02216d8c
[7] Schiller, Z. (2025, January 7). Indefensible tax breaks for data centers will cost Ohio. Policy Matters Ohio. https://policymattersohio.org/research/indefensible-tax-breaks-for-data-centers-will-cost-ohio/
[8] Ohio Department of Taxation. (2026). FY 2025 Annual Report. https://dam.assets.ohio.gov/image/upload/v1768508046/tax.ohio.gov/communications/publications/annual_reports/2025annualreport.pdf
[9] Schiller, Z. (2025, January 7). Indefensible tax breaks for data centers will cost Ohio. Policy Matters Ohio. https://policymattersohio.org/research/indefensible-tax-breaks-for-data-centers-will-cost-ohio/
[10] Zuckerman, J. (2026, May 21). Ohio data center tax break cost $1.4 billion more than expected in 2025. Signal Ohio. https://signalohio.org/ohio-data-center-tax-break-cost-1-4-billion-more-than-expected-in-2025/
[11] Jarboe, M., & Donatelli, J. (2026, May 27). DeWine halts new sales-tax breaks for data centers. News 5 Cleveland. https://www.news5cleveland.com/news/politics/ohio-politics/dewine-halts-new-sales-tax-breaks-for-data-centers
[12] Bryden, M. (2025, September 23). Legislators abandon Fair School Funding Plan, funnel state support away from high-poverty districts. Policy Matters Ohio. https://policymattersohio.org/research/lawmakers-underfund-ohio-schools-by-2-75b/
[13] The Fair School Funding Plan (FSFP) is a bipartisan approach to school funding based on how much districts must spend to educate every child, including those who need different or additional support. The FSFP works because it is based on the actual cost of educating kids, sharing that cost between the state and local communities by considering communities’ ability to cover some of the costs through local taxes. This plan was an overdue response to the Ohio Supreme Court ruling in 1997, which declared that the state’s over-reliance on property taxes to fund schools was unconstitutional. The state has been partially phasing in the FSFP since 2021, but with each budget bill the state shortchanges students by using outdated costs and failing to update weights used to ensure students with additional needs are sufficiently resourced. For more, see: Bryden, M. (2025, September 23). Legislators abandon Fair School Funding, add supplements that increase disparities. Policy Matters Ohio. https://policymattersohio.org/news/2025/09/23/legislators-abandon-fair-school-funding-add-supplements-that-increase-disparities/
[14] Ohio Rev. Code § 122.175. https://codes.ohio.gov/ohio-revised-code/section-122.175
[15] Schiller, Z. (2025, January 7). Indefensible tax breaks for data centers will cost Ohio. Policy Matters Ohio. https://policymattersohio.org/research/indefensible-tax-breaks-for-data-centers-will-cost-ohio/
[16]. Staver, A. (2026, June 10). Ohio’s biggest data centers secured decades of tax breaks. Cleveland.com https://www.cleveland.com/news/2026/06/ohios-biggest-data-centers-secured-decades-of-tax-breaks.html
[17] For example, a data center can use as much water each day as a city of 30,000 to 50,000 people. Many are powered by electricity created by burning coal and diesel, which creates air pollution; associated public health costs nationally are projected to reach between $12 billion and $20 billion a year by 2028. See: O’Donnell, D. (2022, August 16). Data center water usage challenges and sustainability. Sensorex. https://sensorex.com/data-center-water-usage-challenges/
Han, Y., Wu, Z., Li, P., Wierman, A., & Ren, S. (2026). Health-informed computing: Estimating and addressing the public health impact of data centers (arXiv:2412.06288). arXiv. https://arxiv.org/abs/2412.06288
[18] Choose Clinton County Ohio. (2026, January 28). Data center FAQs. https://www.chooseclintoncountyoh.org/news/data-center-faqs
[19] Clinton County Port Authority. (2025, December 4). Proposed CRA & Compensation Agreements Amazon Data Services, Inc. [Presentation to Wilmington City Council]. Choose Clinton County Ohio. https://www.chooseclintoncountyoh.org/media/userfiles/subsite_172/files/Proposed%20Investment%20by%20Amazon%20Data%20Services%20-%20Wilmington%20City%20Council%20-%20December%204%2C%202025.pdf
[20] City of Wilmington. (n.d.). Community Reinvestment Area agreement between Amazon Data Services, Inc. and the City of Wilmington. Choose Clinton County Ohio. https://drive.google.com/file/d/1zKsMkBSsa3Yq5gcdFoYOsLFoWV_VV3_s/view
[21] Trau, M. (2025, January 15). Ohio House speaker still plans to cut public school budget, denounces current funding as “fantasy.” Ohio Capital Journal. https://ohiocapitaljournal.com/2025/01/15/ohio-house-speaker-still-plans-to-cut-public-school-budget-denounces-current-funding-as-fantasy/
[22]. Schiller, Z. (2026, June 4). Legislature could rein in data centers’ sales-tax break by taxing their equipment instead. Policy Matters Ohio. https://policymattersohio.org/news/2026/06/04/legislature-could-rein-in-data-centers-sales-tax-break-by-taxing-their-equipment-instead/
[23] Loudoun County, Virginia. (n.d.). FY 2026 adopted budget. https://sheriff.loudoun.gov/DocumentCenter/View/216033/FY-2026-Adopted-Budget
[24] An Act to Exclude Data Centers from the Business Equipment Tax Exemption and the Dirigo Business Incentives Program and to Require the Department of Economic and Community Development to Study Financial Incentives for Data Centers, L.D. 713, Me. Pub. L. ch. 768 (2026). https://legislature.maine.gov/legis/bills/display_ps.asp?LD=713&snum=132
[25] Alabama Department of Revenue. (2026, October 6). Chapter 9B abatements. https://www.revenue.alabama.gov/tax-incentives/chapter-9b-abatements/ https://www.revenue.alabama.gov/tax-incentives/chapter-9b-abatements/