More than a dozen U.S. states, including Ohio, Illinois, New Jersey and Washington, have withdrawn, frozen or revised data-center tax incentives as residents and lawmakers challenge their cost, electricity and water demands. Ohio halted new sales-tax exemption applications in May after the program exceeded $1.5 billion in the previous fiscal year, more than 10 times its initial forecast. Representative Tristan Rader is seeking to eliminate the exemption and reopen long-term agreements with companies including Amazon, Meta and Google. New Jersey canceled $250 million of remaining credits authorized in 2024, while Virginia retained its sales-tax exemption but added a levy on electricity consumed by data centers. The backlash has intensified alongside rapid artificial-intelligence expansion, although industry advocates and some analysts say the facilities continue to deliver jobs, tax revenue and economic benefits. Developers may favor Indiana, West Virginia and Wyoming as Ohio, Arizona and Illinois become less attractive investment destinations.