Illinois Joins Ohio in Ordering Pause on Data Center Tax Credits

Governor JB Pritzker issued an order pausing state tax incentives for data centers in Illinois after the state legislature stalled his plan to keep data-center energy costs from affecting local residents’ bills.

Pritzker, a Democrat seeking his third term, said his order was in response to the legislature’s failure to raise data centers’ electricity rates, given their high energy usage, which he asked them to do in February. He plans to push the issue during the veto session in mid-November.

“Data centers are asking just too much for too little in return, whether it’s electricity or clean water,” Pritzker said in a video posted on X. “We can’t let them cause our utility bills to go up.”

Ohio paused tax incentives for data centers on Wednesday. Governor Mike DeWine ordered a halt to a program offering tax breaks while a committee studies the economic impact of the projects.

The governor’s order on Friday also comes amid growing opposition to data centers. Development projects worth about $64 billion have been delayed or canceled across the US due to community pushback, according to industry researcher Data Center Watch. In January, the city council in Naperville, Illinois, voted down plans for a proposed data center in the Chicago suburb, where many residents expressed fears that the project would increase their water and energy costs.

Pritzker’s move puts him in opposition to a core Democratic constituency: organized labor, which has called for the tax breaks to continue. Unions support the incentives so that their members can build the data centers. Climate Jobs Illinois, an umbrella group representing 15 unions, issued a statement on Friday calling on Pritzker to reverse his pause.

“This pause does nothing to lower utility bills, protect the grid, or advance clean energy. Instead, it will send billions of dollars in investment and thousands of union jobs to Indiana, Kentucky, and Ohio — states that sit on the same electrical grid, where those data centers will be built anyway, just without Illinois workers,” the group said in its statement.

Pritzker’s order won’t affect agreements entered into before July 1, and companies are still able to seek local tax relief support. The state provided almost $1 billion in tax incentives between 2020 and 2024, according to a report from the state’s Department of Commerce and Economic Opportunity. Illinois has seen more than $15 billion in investments from data centers.

Copyright 2026 Bloomberg.

Topics
Ohio
Illinois