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OH — State Policy Updated January 2026

Ohio

Statewide incentives and constraints, plus key utility regulation and active local policy debate.

Sales and Use Tax Exemption for Data Center Equipment $100 million investment threshold $1.5 million annual payroll requirement Agreement compliance and reporting Utility Regulation

Overview

Ohio offers one of the most generous data center incentives in the Midwest — a complete sales and use tax exemption on equipment for facilities that invest at least $100 million and maintain $1.5 million in annual payroll. The program is agreement-based, requiring annual compliance reporting and granting the state authority to claw back exemptions if conditions are not met. Separately, Ohio’s Public Utilities Commission approved a specialized Data Center Tariff for AEP Ohio customers in 2025, establishing strict load ramp requirements and collateral rules for large-load connections.

Incentives

Sales and Use Tax Exemption for Data Center Equipment

Ohio’s Tax Credit Authority can grant a complete or partial exemption from sales and use tax on computer data center equipment — including delivery, installation, and repair costs — for eligible facilities that enter into an agreement under R.C. 122.175.[1]

  • Investment threshold: At least $100 million in capital investment at the project site within three consecutive calendar years (for projects beginning in or after 2015).
  • Payroll threshold: $1.5 million in annual compensation subject to Ohio withholding at the project site, starting in month 25 after the agreement date.
  • Exemption rate: Up to 100% of sales and use tax otherwise due, with the term set by the Tax Credit Authority.

Requirements and Conditions

Agreement Conditions and Compliance

Ohio’s data center tax exemption is not automatic — it requires an agreement and ongoing compliance.

  • The Tax Credit Authority must determine that the project will increase payroll, that the applicant can complete the project, and that the exemption is a major factor in the project decision.[1]
  • The data center must remain eligible and maintain operations; if operations stop, the exemption cannot be claimed during the shutdown, and extended noncompliance can trigger agreement termination.[1]
  • Annual reporting and verification are required, with the Director of Development issuing a yearly verification certificate to each taxpayer.[1]
  • The authority can reduce or terminate the exemption and require repayment of previously exempted taxes if compliance fails.[1]

Reporting and Transparency

The Director of Development must issue an annual report on agreements and project status each year by August 1.[1] Financial statements submitted for the exemption are confidential and excluded from public records law, with limited exceptions.[1]

Utility and Grid Rules

AEP Ohio Data Center Tariff

The Public Utilities Commission of Ohio (PUCO) adopted AEP Ohio’s Data Center Tariff settlement on July 9, 2025, with the compliance tariff becoming effective July 23, 2025.[2] The tariff establishes strict conditions for large-load data center connections.

  • Load ramp period: Maximum of four years, with minimum contract capacity thresholds of 50% (Year 1), 65% (Year 2), 80% (Year 3), and 90% (Year 4).[2]
  • Contract term: Equals the load ramp period plus eight years, with limited adjustment only if infrastructure is delayed.[2]
  • Collateral requirements: Customers must post a guarantee or collateral equal to 50% of total minimum charges at signing, unless they meet credit and liquidity thresholds.[2]
  • Planning and review: Customers must provide detailed load information (including NERC-related questionnaires), and the final plan of service is subject to regional transmission organization (RTO) review and approval.[2]

Local Zoning

Jerome Township (Delaware County) adopted a moratorium on zoning certificates for data centers in September 2025, reflecting local concerns about siting, infrastructure, and community impacts.[3]

What to Watch

  • Utility tariff expansion: Whether other Ohio utilities (AES Ohio, Duke Energy Ohio) adopt data center-specific tariffs or large-load rules similar to AEP Ohio’s.
  • Legislative changes: New 2026 legislation affecting the data center sales and use tax exemption or reporting requirements.
  • Local moratorium spread: Whether other townships or counties follow Jerome Township’s lead with zoning restrictions or moratoria.

Sources

[1] Ohio Revised Code, “Section 122.175 — Tax exemption for sale, storage, use, or other consumption of computer data center equipment,” effective September 30, 2025 (House Bill 96, 136th General Assembly), https://codes.ohio.gov/ohio-revised-code/section-122.175 (accessed January 8, 2026).

[2] AEP Ohio, “Data Center Tariff,” undated page describing PUCO adoption on July 9, 2025 and effective date July 23, 2025, https://www.aepohio.com/company/about/rates/data-center-tariff/ (accessed January 8, 2026).

[3] Ohio Manufacturers’ Association, “Central Ohio Township Places Moratorium on New Data Centers,” September 12, 2025, https://www.ohiomfg.com/our-communities/central-ohio-township-places-moratorium-on-new-data-centers/ (accessed January 8, 2026).