Texas, Ohio and Georgia “account for more than 40% of all planned data-center capacity combined”, the Wall Street Journal reported on 11 November, and all three elected new governors on 3 November. The three states’ own budget estimates put the state sales tax they forgo on data centers at $2,507.6 million for 2027, by our arithmetic, up about 54% from $1,625.6 million for 2025.
Texas accounts for $1,598.0 million of the 2027 total, or 63.7%, Georgia $761.6 million and Ohio $148.0 million. In Texas, lawmakers filed at least five bills this week to repeal the exemption.
The Journal’s piece, a video with a short text, says the three states “saw strong voter pushback against data centers and artificial intelligence in the recent midterm elections”. It says investors and AI companies are waiting to see what newly elected Democrats will do about data-center projects, “which approached $100 billion in private spending as of September”.
AP called the governor races for Gina Hinojosa in Texas, Keisha Bottoms in Georgia and Amy Acton in Ohio, all Democrats, as we reported in AP Calls 4 of 5 Data Center Governor Races. That piece set out what each said about data centers during the campaign: Bottoms said she would support a temporary pause, and Acton said she would support a conditional moratorium tied to data centers covering 100% of their utility costs.
State sales tax forgone on data centers in Texas, Georgia and Ohio, from each state’s own estimates. Totals and growth rates are our arithmetic; periods and methods differ by state.
Business Pill · Capex and Depreciation
An evergreen Business Engineer explainer on capital spending and depreciation in AI hardware. It teaches the general idea only and does not discuss state taxes or these three states.
The key insight: As we read it, the state tax lever is larger and growing faster than the local fights suggest: by our arithmetic the three states’ own estimates put data center sales tax forgone at $2,507.6 million for 2027, about 54% more than for 2025, and Texas, where repeal bills are already filed, is 63.7% of it.
Georgia. A fiscal note dated 26 January 2026 for Senate Bill 408, which would move the exemption’s sunset from 2032 to 2027, puts forgone state sales tax at $474.2 million in 2025 and $761.6 million in 2027, rising to $866.7 million in 2030. The figures come from a state-commissioned evaluation that found 30% of Georgia’s data centers “could be attributed to the tax exemption”.
Ohio. The state’s tax expenditure report for fiscal 2026 and 2027 puts General Revenue Fund revenue forgone on data center equipment at $135.8 million in fiscal 2025 and $148.0 million in fiscal 2027. That is growth of about 9% over two years, against about 57% in Texas and 61% in Georgia, by our arithmetic.
The Repeal Bills Already Filed
Texas lawmakers “filed at least five bills on the first day of prefiling for the 2027 session to repeal the state sales tax exemption for data centers, including HB 167 and SB 293”, the law firm Foley & Lardner wrote. It said 23 of the Senate’s 31 members and members-elect had signed on to SB 293, filed by Senate Finance Committee Chair Joan Huffman.
Foley wrote that the exemption was first estimated to cost $14.6 million for 2014-15 and that the Comptroller now puts it at $3.3 billion for 2028-29. It said HB 167 lets data centers already certified keep the exemption until it runs out, while SB 293, as its author has described it, does not. Lawmakers convene on 12 January.
In Georgia, a separate fiscal note for Senate Bill 410 covers a bill that would stop new exemption certificates and set contract terms between utilities and large load customers. It says certificates already issued “will continue to be governed by current law”.
As we read the three estimates side by side, Texas and Georgia grow fastest, about 57% and 61% from 2025 to 2027 by our arithmetic, while Ohio grows about 9%; the two fastest-growing states are also the two where bills to end or sunset the exemption have been filed.
As we read the Texas bills, the open question is the 138 data centers already certified, 59 of them this year: Foley & Lardner says HB 167 would let their exemptions run, while SB 293, as its author has described it, would not.
Foley & Lardner, 11 November 2026
“Repeal has authors in both parties and 23 senators on a single bill, so the fight will be over details.”
Three Implications
FOR BUILDERS IN TEXAS Foley says a campus buying $1 billion in servers and electrical equipment would owe $62.5 million in state sales tax that it does not owe today.
FOR GEORGIA The SB 408 fiscal note puts forgone state sales tax at $761.6 million in 2027 and $866.7 million in 2030.
FOR OHIO The tax expenditure report puts General Revenue Fund revenue forgone on data center equipment at $148.0 million in fiscal 2027.
The framework says: “The supercycle has a ceiling now, and the ceiling is political.”
As we read it, a state sales tax exemption is one place where that political ceiling becomes a line item: the 6.25% Texas rate on equipment is the cost the repeal bills would add. The framework predates these bills and does not discuss them.
What Is Not Established
The three estimates are not like for like. Texas and Ohio count state fiscal years and Georgia calendar years, each state uses its own method, and all three cover only the state share of sales tax. They are projections made before 2027, not amounts collected or forgone.
Neither the governors-elect nor the bills have changed any exemption yet. This piece does not report a position from Hinojosa, Bottoms or Acton on these specific bills, and we did not contact their offices. The Journal’s piece is mainly a video; we read its text.
This Week In The AI Supercycle
The Great Convergence of Capital, Power, and Geopolitics
This week’s issue: for two years the AI build-out was priced as a supply story, and last week as a credit story. This week it was priced as a permission story, and the answer arrived as a cost, not a ban.
Texas, Ohio and Georgia hold more than 40% of planned US data-center capacity, the Journal reported. Their own estimates put the state sales tax they forgo on data centers at about $2.5 billion for 2027, by our arithmetic, with Texas at 63.7% of it and repeal bills already filed there.
A note on sourcing. We read the text of the Wall Street Journal’s 11 November piece in full; the piece is mainly a video. The Texas figures are from the Comptroller’s January 2025 tax exemptions report, the Georgia figures from the state’s fiscal notes for Senate Bills 408 and 410 and its audit office’s evaluation summary, and the Ohio figures from the state’s tax expenditure report for fiscal 2026 and 2027.
The Texas bill details are from a Foley & Lardner client alert. Governor race calls are AP’s, as we reported on 4 November. The totals, shares and growth rates are our arithmetic. We did not contact the governors-elect or the bill sponsors for this piece.
Gennaro Cuofano is a CRO and tech executive who has worked in AI since late 2015, starting with bringing NLP, natural-language generation, voice and chatbot products to the marketing industry. His background is in law and finance: he holds a Master's degree in Law and an International MBA with an emphasis on corporate finance (LUISS Business School and the University of San Diego, 2012), and worked as a financial analyst at a real-estate investment firm in San Diego and as an assistant controller. His work focuses on business model strategy, business engineering and, more broadly, structural analysis: how companies make money, read from their own filings. He created FourWeekMBA and leads research there and at The Business Engineer, his newsletter on AI and business strategy, with over 95,000 subscribers and more than 1,000 published analyses. His writing has also appeared on Entrepreneur (for example, How to Digitize a Family Business in Europe) and HackerNoon. Find him on LinkedIn and Substack. See how we source.
