Effective January 1, 2026, Iowa House File 976 (“HF-976”) amends sections of the Sales and Use Tax Act that pertain to the data center and web search portal businesses exemption. Iowa has experienced a decade of success in attracting enterprise users and developers to the state. The changes brought about by HF-976 are mixed. It sheds a positive light on tenant eligibility while placing greater requirements and limitations on the exemption.
Key Changes
- Exemption Term Limits: Under prior law, data center and web search portal businesses, which began operations prior to January 1, 2026, are not limited.
- Data center and web search portal businesses beginning operations on or after January 1, 2026, are subject to the newly established expiration dates on the sales and use tax exemption for backup power generation fuel and electricity purchased. The exemption for these items will now expire after 10 or 15 years, dependent on the location of the data center facility.
- Registration and Reporting Requirements: By no later than January 31, 2026, all data center and web search portal businesses must register with the Iowa Department of Revenue (DOR) and annually file a report thereafter. The annual report and registration are required to annually renew the exemption certificate issued by the DOR.
- Tenant Eligibility: HF-976 modified the Sales and Use Tax Act to now allow tenants who lease a data center to claim the programs benefits.
How Can Ryan Help?
If you have an existing data center or web search portal business in Iowa or are planning to begin operations in the state, please contact the Ryan Data Center Incentives team (more information below). We have extensive experience working with clients in Iowa and have working relationships with the DOR that allow us to proactively plan for these upcoming changes.
Why Ryan?
With more than $100 billion of new data center project capital investment over the next five years across nearly all the contiguous United States, the Ryan Data Center Incentives team has a proven track record of working with data center businesses to secure significant savings as they develop, refurbish, and grow their offerings. To learn more about the latest trends in the industry, register to watch a free, pre-recorded webinar on Data Center Tax Incentives: Navigating National Landscapes hosted by Michael Falleroni and Matt Lowell.
TECHNICAL INFORMATION CONTACTS:
Michael Falleroni
Principal
Ryan
412.889.6434
michael.falleroni@ryan.com
Matt Lowell
Principal
Ryan
321.251.2924
matt.lowell@ryan.com
Austin Arnold
Senior Manager
Ryan
380.710.9686
austin.arnold@ryan.com
Brad Vincent
Consultant
Ryan
321.251.2929
bradley.vincent@ryan.com
Ryan Data Center Team
datacenters@ryan.com
The material presented in this communication is intended to provide general information only and should solely be seen as broad guidance and not directed to the particular facts or circumstances of any individual who may read this publication. No liability is accepted for acts or omissions taken in reliance upon the content of this piece. Before taking (or not taking) any action, readers should seek professional advice specific to their situation from Ryan, LLC or other tax professionals. For additional information about this topic, please contact us at info@ryan.com.
- Topics
- Michael Falleroni
- Matthew Lowell