Iowa has five different sales and use tax exemptions
specifically for data centers. On June 6, 2025, Iowa Governor Kim
Reynolds signed
H.F. 976, a law which changes the scope and administration of
these data center exemptions. The data center portions of this bill
take effect immediately. Businesses with current or proposed data
center projects in Iowa should review this bill. H.F. 976 impacts
data center exemptions for electricity and fuel. And the impact
depends on where the data center is located.
Changes to Exemptions for Large Data Center Projects
Iowa has three sales and use tax exemptions for large data
center projects. Large data center projects are those with
investments of $200 million or more. Prior to H.F. 976, large data
centers that met minimum investment and other legal requirements
were allowed to indefinitely purchase computers, equipment, and
energy exempt from Iowa sales and use tax. These exemptions also
applied to electricity and backup power
