Opportunity Zone data centers in Ohio

Ohio offers a strong market and full state tax conformity, but the zones and the data center hot spots only partly overlap. Central Ohio is one of the busiest data center markets in the country, with Meta, Google, Amazon Web Services and colocation operators building around New Albany and Columbus.^1,2 An Opportunity Zone (a low-income census tract designated by the governor and certified by Treasury) gives investors who put capital gains into a Qualified Opportunity Fund (QOF) deferral, a 10% or 30% basis step-up after five years, and tax-free appreciation after 10 years under IRC §1400Z-2.³

Three Ohio facts shape every deal. First, a new zone map takes effect January 1, 2027, and the governor's nominations were still being finalized in October 2026.^4,5 Second, Ohio's income tax follows the federal Opportunity Zone rules, so Ohio investors defer state tax too.⁶ Third, the state's data center sales tax exemption is paused for new requests, which removes one of the incentives that used to stack with OZ equity.^7,8

Up to 258 of Ohio's 1,032 eligible tracts, chosen by Gov. DeWine and certified by Treasury. The eligible list comes from Rev. Proc. 2026-14, which identified 25,332 low-income community tracts nationally, 8,334 of them wholly rural.⁵ A tract qualifies if its median family income is no more than 70% of the area median, or if its poverty rate is at least 20% and its median family income is no more than 125% of the area median. A governor may designate no more than 25% of eligible tracts.¹¹

We found no public announcement of Ohio's final nominated tracts as of October 22, 2026, so treat any list you see as proposed until Treasury certifies it. Treasury has updated its eligibility analysis for some states during the process, so Ohio's final cap could move by a tract or two. Check a specific parcel with the tools in how to check if a property is in an Opportunity Zone, and see the new Opportunity Zone maps for 2027 for the national picture.

Rural tracts matter more for data centers than for most asset classes. A Qualified Rural Opportunity Fund (QROF) holds at least 90% of its assets in zones made up entirely of rural area and gives investors a 30% step-up after five years instead of 10%. In wholly rural zones, an existing building is substantially improved when improvements exceed 50% of its basis rather than 100%.¹² Much of eastern and southeastern Ohio, including former power plant towns along the Ohio and Muskingum rivers, is rural under the statutory test (outside any city of more than 50,000 people and its adjacent urbanized area). See rural Opportunity Zones.

Yes. The Ohio Opportunity Zone Tax Credit gives investors a state income tax credit equal to 10% of the amount their fund invested in projects located in Ohio Opportunity Zones.¹³ It is separate from the federal benefits and does not require a capital gain. The budget bill (H.B. 96) doubled the allocation to $50 million for each of fiscal 2026 and fiscal 2027 and added a $5 million cap per project, no matter how many investors apply for the same project.¹⁴

• The investor must invest in an Ohio qualified opportunity fund, a QOF that holds 100% of its invested assets in qualified opportunity zone property in Ohio, and the fund's governing documents must designate it a QOF under §1400Z-2.¹⁵
• Only money used to improve property in an Ohio zone counts; acquisition costs no longer qualify, and from the July 2026 round the property owner must document that fund money was spent on improvements.^15,13
• Applications are taken in two windows a year for investments made in the prior six months. The next window runs January 11 to 18, 2027, for investments made July 1 to December 31, 2026.¹³
• Demand exceeds supply: Thompson Hine reports more than $43 million of credits were awarded in the July 2025 round, and no credits are authorized beyond fiscal 2027 unless the General Assembly acts.^15,14

For a data center the credit is real but small. At 10%, the $5 million project cap is reached on $50 million of improvement spending, while Cushman & Wakefield puts all-in greenfield data center cost at about $8.9 million to $23.3 million per MW.¹⁶ The credit can sweeten an Ohio-resident investor's return on a smaller edge or colocation project; on a hyperscale campus it is a rounding item.

Ohio follows the federal treatment: deferred gain is not in Ohio income until it is included federally, and appreciation excluded after 10 years is excluded for Ohio too. Ohio's personal income tax starts from federal adjusted gross income. S.B. 9, signed March 5, 2026 with an emergency clause, moved Ohio's Internal Revenue Code conformity date to the signing date, picking up federal changes enacted after March 7, 2025, including the current Opportunity Zone rules.^6,17 That places Ohio among the conforming states described in state tax treatment of Opportunity Zone investments.

Ohio moved to a flat 2.75% rate on nonbusiness income above $26,050 for tax years beginning in 2026, and capital gains are taxed at that rate with no separate capital gains schedule.¹⁸ The worked example below assumes the 2.75% rate still applies when the deferred gain is included, which depends on future budgets.

Two Ohio wrinkles. Ohio remains decoupled from federal bonus depreciation under §168(k), so the large first-year deductions that data center equipment generates federally are spread out for Ohio purposes, which changes the losses an Ohio investor sees on a K-1.⁶ And because Ohio taxes residents on all income, a resident who invests in a QOF that builds in another state still gets Ohio deferral. See depreciation, bonus depreciation and Opportunity Zones for the federal side.

Ohio is a top-tier and fast-growing market centered on Columbus. A January 2026 analysis using University of Virginia data counted more than 100 operating data centers in Ohio with 77 more slated by 2030, and projected that Columbus will pass New York to become the second-largest hub in the Great Lakes region after Chicago.¹ Meta's Prometheus campus in New Albany is described as the first data center requiring more than 1 gigawatt of power.¹

• Amazon Web Services said in December 2024 it would invest another $10 billion in Ohio, bringing its committed spending in the state to more than $23 billion, with new sites contingent on long-term energy agreements.²
• AEP Ohio told regulators in February 2026 that it had 5,642 MW of data center contracts signed under its data center tariff on top of 12,219 MW signed earlier, 17,861 MW in all, coming online through 2035. AEP Ohio's total peak demand has run about 8,000 to 10,500 MW.⁹
• Development is spreading beyond Licking and Franklin counties. Aligned Data Centers is building a roughly 200-acre campus at the Conesville Industrial Park in Coshocton County, next to AEP's retired Conesville coal plant.¹⁹

The demand drivers are hyperscale cloud and AI build-outs, central location within a day's drive of much of the U.S. population, available land and, until recently, generous sales tax treatment. Power is now the binding constraint, which pushes new projects toward sites with existing transmission or on-site generation, including former industrial and power plant sites in rural eastern Ohio.

Ohio's main data center incentive, a sales and use tax exemption on equipment, is closed to new requests for now. The exemption requires $100 million of investment over three years and more than $1.5 million of annual Ohio payroll, and the Tax Credit Authority can grant up to 100%.⁷ On May 27, 2026, Gov. DeWine directed the Tax Credit Authority to stop taking new requests while the General Assembly's Joint Data Center Committee studies the sector; his office said the pause is not a ban on data centers.⁷ State figures reported in May 2026 put the exemption's 2025 cost at more than $1.5 billion against an earlier estimate of about $136 million.¹⁰ In August, DeWine said the pause will continue until he leaves office.⁸

The legislature has not settled the program's future. In June 2026 the Senate informally passed a substitute House Bill 646 that would cut the exemption for future projects from 100% to between 50% and 75%, with the higher rate for brownfield sites or projects that bring their own power, while leaving existing agreements alone; the House and Senate did not reach a deal before summer recess.²⁰

Payment-in-lieu-of-taxes (PILOT) deals in which a port authority or city holds title and leases the facility back need a separate Opportunity Zone review, because the QOZB must own or lease the property on terms that count toward its 70% tangible property test. The general rules are in state data center incentives and Opportunity Zones and stacking incentives with Opportunity Zones.

Power is available but expensive and contractually demanding. Ohio is in PJM, the regional grid operator, whose 2028/2029 capacity auction cleared at its $325 per MW-day cap and still fell 6,831 MW short of the reliability requirement; PJM attributed the higher load forecast largely to large loads.²¹ Capacity prices flow into every large customer's bill.

• AEP Ohio's data center tariff, approved by the Public Utilities Commission of Ohio on July 9, 2025, applies to new data centers above 25 MW. They must pay for at least 85% of subscribed demand for up to 12 years, including a four-year ramp, and post collateral and exit fees.²²
• Behind-the-meter generation is growing. The PUCO chair told lawmakers in May 2026 that the Ohio Power Siting Board authorized or received applications for more than 2,000 MW of behind-the-meter dispatchable generation in 2025 alone.²³
• Co-location rules across PJM are being rewritten. FERC found PJM's tariff unjust and unreasonable in December 2025 for lacking clear co-located load rules and ordered new transmission service options.²⁴

For an Opportunity Zone project the timing matters. A QOZB can hold cash for up to 31 months under a written working capital plan (62 months with consecutive plans), but utility study and construction delays are not clearly the kind of governmental delay that extends the period. Sites with a signed AEP Ohio electric service agreement or a permitted on-site plant fit the safe harbor far better than sites still in the study queue. See the working capital safe harbor and power interconnection for Opportunity Zone data centers.

Look east and southeast of Columbus, and at former industrial and power plant sites, rather than the New Albany core. The fastest-growing suburbs are higher-income areas where few tracts are likely to meet the 70% income test, while retired coal plant sites, river towns and older industrial parks are more likely to be in eligible and rural tracts.

Lease structure matters as much as location. A QOZB that leases a powered shell to a single hyperscaler on a triple-net lease risks failing the active trade or business requirement, because the regulations say merely entering into a triple-net lease is not an active business. Colocation, operator-run facilities and leases where the landlord provides real services hold up better. See data center lease structures and converting buildings to data centers.

• Ohio investors with capital gains: you defer Ohio's 2.75% tax along with federal tax, whether the QOF builds in Ohio or elsewhere. Investing through an Ohio qualified opportunity fund can add the 10% state credit, subject to the per-project cap and limited allocation.
• Investors outside Ohio: your home state decides your state deferral. An Ohio project matters to you mainly through its economics and, if you are a nonresident with Ohio-source gain, through Ohio's nonresident rules.
• Landowners: land in a 2027 zone near transmission is worth more to OZ buyers, but only after Treasury certifies the tract. Gain on selling the land can itself be invested in a QOF within 180 days. See Opportunity Zones for landowners.
• Developers: plan without the state sales tax exemption, budget for AEP Ohio's minimum-bill and collateral terms, and phase capital so each tranche fits a 31-month working capital plan.

OZ Data Centers sponsors funds that develop data centers in Opportunity Zones, and Ohio is the kind of market where the zone map, power terms and state incentives all have to line up. When a decision depends on your own tax position, confirm it with your tax adviser.