Study Says Iowa Could Double Data Center Tax Revenue by Changing Tax Classification
A Common Sense Institute Iowa study says the state could collect substantially more data center property-tax revenue by taxing data centers like manufacturers. The report estimates revenue could double, while Ames has paused a data center approval for further research following community pushback.
A Common Sense Institute Iowa economic study argues that Iowa could significantly increase tax revenue from data centers by changing how they are classified for property-tax purposes. Data centers currently are taxed on inputs such as servers as well as on outputs, while manufacturers are generally taxed only on their output.
The study says data centers paid $56 million in Iowa property taxes in 2025, a figure projected to reach $140 million by 2031 and $292 million by 2040 under current policy. Common Sense Institute Iowa estimates those totals could double if data centers were treated as manufacturers. The report comes as the City of Ames pauses a data center approval to conduct additional research after community opposition.