Iowa could double data center tax revenue
A Common Sense Institute study says Iowa could collect hundreds of millions of dollars more in data center property taxes by taxing facilities more like manufacturers. The report projects nearly $292 million in data center property taxes by 2040 under current rules and says that figure could roughly double with changes to state law.
A new Common Sense Institute study examines Iowa's data center tax structure and estimates the state could substantially increase revenue by taxing data centers more like manufacturers. Data centers are currently taxed on their servers and again on their outputs, while manufacturers are taxed based on what they produce.
The study projects that data centers will generate nearly $292 million in property taxes by 2040 under existing rules, but says the amount could double if Iowa establishes what researchers describe as a more level tax playing field. It also found that data center properties generated about 153 times more property tax revenue in 2025 than their previous uses, a figure projected to exceed 500 times more by 2040. Researchers said policymakers should avoid tax policies that discourage investment and noted that increased revenue could provide property tax relief for homeowners.