Iowa could be taking in millions of additional dollars from data centers, study finds
A Common Sense Institute Iowa study says the state could collect hundreds of millions of additional dollars in data center taxes by treating data centers like manufacturers. The report comes as Ames pauses a data center approval amid community pushback and as officials weigh economic benefits against infrastructure concerns.
Common Sense Institute Iowa estimates that data centers paid $56 million in property taxes in 2025, with that figure projected to reach $140 million by 2031 and $292 million by 2040. The institute says tax revenue could be roughly doubled if Iowa taxed data centers like manufacturers, which are generally taxed on output rather than on both equipment inputs and output.
The findings come amid debate over the effects of data center growth on Iowa communities. Ames recently paused a data center approval to allow additional research following community pushback. Critics have raised concerns about strain on power and water infrastructure and potentially higher utility bills, while the institute argues that data center investment can create jobs and economic growth. In Cedar Rapids, the report points to Google-funded transmission and generation upgrades as an example of infrastructure investment that could help reduce future power bills.