Ohio State Data Center Tax Incentives

Learn why Ohio is ideal for data centers, offering sales tax exemptions and incentives that reduce costs and attract major tech investment.

Ohio’s business-friendly climate and robust incentive programs make it an ideal location for data center development, with the Data Center Tax Exemption standing out as a key benefit for qualifying projects. Ohio’s Data Center Tax Exemption is a targeted incentive designed to attract and support data center development by reducing the cost of qualifying equipment and software.

Key Incentive Available to Ohio Data Center Developments: Sales and Use Tax Exemption

The Data Center Tax Exemption provides a sales-tax exemption rate and term that allow for partial or full sales tax exemption on the purchase of eligible data center equipment. Projects must meet minimum investment and payroll thresholds to be eligible. Final approval of the tax exemption is contingent upon the approval of the Ohio Tax Credit Authority.

To qualify for exemptions, projects must meet minimum investment and payroll thresholds: A company must make at least $100 million in capital investment over three years and pay annual compensation to employees of at least $1.5 million (as specified in R.C. 122.175).

Additional State Requirements for Data Center Development Exemptions:

• Project must create and maintain a certain number of jobs (varies by project)
• Project must apply for and achieve certification by the Ohio Tax Credit Authority

Key Exemption Terms:

• Exemptions can last up to 15 years
• Applies to both new builds and expansions of existing facilities

Exemption Benefits:

• The exemption provides a partial or full waiver of both state and local sales and use taxes on eligible equipment purchases.
• This incentive results in significant cost savings by reducing upfront capital expenses for data center infrastructure and technology.
• It encourages large-scale investment and expansion of data centers within Ohio.
• The exemption supports operational efficiency by covering a wide range of equipment critical to data center performance, including energy-efficient and backup systems.

Qualifying Purchases:

• Computer equipment such as servers, storage devices and networking hardware
• Software including operating systems and virtualization platforms
• Power infrastructure including generators, UPS systems and transformers
• Cooling systems
• Cabling and wiring for power and data transmission
• Racks and enclosures
• Security systems
• Fire suppression systems
• Building materials used in constructing or expanding the data center if directly related to the facility’s operation
• Maintenance and replacement parts for qualifying equipment

Why Ohio is an Ideal State for Data Center Development

Ohio has emerged as a top-tier destination for data center development due to a combination of strategic, economic and infrastructural advantages. Some of the reasons Ohio is considered ideal for data centers include its:

• Strategic location with access to major U.S. markets
• Reliable and scalable power infrastructure
• Strong fiber and broadband connectivity
• Competitive tax incentives for large investments
• Significant private capital investment in the sector
• Availability of skilled, high-wage tech labor
• Opportunities for brownfield and industrial site redevelopment
• Supportive and business-friendly regulatory environment