Illinois Joins Ohio in Ordering Pause on Data Center Tax Credits

Energy News Beat

Illinois Governor JB Pritzker has joined Ohio Governor Mike DeWine in hitting the pause button on tax incentives for new data centers. On June 5, 2026, Pritzker directed the Illinois Department of Commerce and Economic Opportunity (DCEO) to stop processing new agreements under the Data Center Investment Program effective July 1.

This move mirrors Ohio’s decision in late May, when DeWine ordered the Ohio Tax Credit Authority to halt new sales and use tax exemptions for data centers while a Joint Data Center Committee reviews their growth and impacts.

Both states cite concerns over exploding electricity demand, grid strain, and costs being shifted to everyday ratepayers. Data centers are power hogs—often consuming as much electricity as small cities—and the AI boom is only accelerating that. But here’s the uncomfortable truth that neither governor is fully confronting: halting tax credits is only part of the problem. Data centers done right are not the enemy—they’re a critical part of America’s energy future. The real issue is the energy policies in blue states like Illinois that make reliable, affordable power scarce and expensive in the first place.

The Backdrop: AI-Driven Demand Meets Policy Failure

Pritzker’s order came after the Illinois legislature stalled on his February proposal to raise electricity rates specifically for data centers to shield residential bills.

He’s now calling for a “comprehensive framework” during the fall veto session that would protect affordability, natural resources, and “responsible growth.” Ohio’s pause is framed more neutrally as a study period after the state reportedly lost $1.6 billion in expected tax revenue from these incentives in 2025 alone.

Neither action bans data centers outright—Pritzker and DeWine both emphasize they want “responsible” development—but both are using the incentive lever to force concessions on costs and infrastructure. This comes as data centers nationwide face backlash over water use, noise, farmland conversion, and grid upgrades. Yet the demand isn’t going away. U.S. data center power needs are projected to triple by 2028. Tech giants need 24/7 firm power, not intermittent wind and solar that go dark when the wind stops blowing or the sun sets. Virtue Signaling or Real Reform?

Let’s be blunt: these executive orders smell more like political theater than a genuine solution. In Illinois, a deep-blue state, Pritzker is a Democrat pushing policies that sound good on paper—make Big Tech pay their “fair share”—while the underlying energy regime remains stacked against abundance. Illinois already has aggressive renewable portfolio standards, carbon pricing pressures, and mandates that prioritize intermittent sources over dispatchable natural gas, coal, or nuclear. The result? Electricity rates in blue states average about 38% higher than in red states, according to recent analyses.

Illinois’ own POWER Act (Protecting Our Water, Energy, and Ratepayers), introduced earlier this year, would force new data centers to pay for grid upgrades and source a chunk of their power from renewables.

That sounds responsible until you realize it doubles down on the same policies driving up costs for everyone else. Data centers expose the fragility of these systems—they don’t create the supply shortage; bad policy does. As Stu Turley wrote in The Energy News Beat just yesterday, legislators are “missing the mark before they start” by treating data centers as the villain instead of fixing the disease—policy-driven supply shortages from renewables-first mandates, premature plant retirements, and cost-shifting via net metering and cap-and-trade.

True reform would mean permitting reform for gas plants, nuclear, transmission, and pipelines; all-of-the-above incentives for co-located generation; and reliability standards that put 24/7 power first. These pauses don’t deliver any of that. They’re a weak virtue signal: “Look, we’re standing up to Big Tech!” while the grid keeps groaning under the weight of mandates that ignore physics.

Even the Bears Are Voting With Their Feet

The irony isn’t lost on anyone watching Illinois politics. While Pritzker pauses data center incentives, the Chicago Bears just announced they’re advancing their new stadium project in Hammond, Indiana, after the Illinois legislature failed—yet again—to deliver stadium incentives before adjourning.

The Bears’ board voted to move forward across the state line because Indiana had its act together. Illinois lawmakers couldn’t even pass a last-minute bill to create a local stadium authority and avoid property taxes. This isn’t just about football—it’s Exhibit A of businesses and major institutions fleeing high-tax, high-regulation blue states. When even an NFL team packs up because Springfield can’t deliver, what message does that send to data center developers who need gigawatts of reliable power? Ohio, a purple state with a Republican governor, is at least studying the issue with a joint legislative committee. But the pattern holds: without abundant, affordable energy policy, incentives alone can’t fix what the regulators broke.

Data Centers Done Right Are Needed—But Policy Must Change

No one is saying data centers should get blank checks or externalize costs. Done right, they can drive economic growth, create jobs, and even spur on-site generation (think small modular reactors or gas-fired plants co-located with the centers). But pausing tax credits without reforming the energy rules is like putting a band-aid on a broken leg. Illinois and Ohio need to look in the mirror at their own energy policies—the ones that have made blue-state electricity 38% more expensive and less reliable.

Until lawmakers prioritize supply expansion and reliability over virtue-signaling mandates, these pauses will do little more than slow the inevitable while pushing investment to states that actually welcome growth. The AI revolution isn’t waiting. Neither should America’s energy policy.

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