Iowa House passes sales tax exemption for nuclear energy facilities

The Duane Arnold Energy Center in Palo, which ceased operations in 2020 and is currently projected to be restarted by 2029 by NextEra Energy. (Photo via NextEra Energy)

by Robin Opsahl, Iowa Capital Dispatch
April 15, 2026

The Iowa House approved a bill Wednesday that would give nuclear energy facilities an exemption on sales and use taxes.

House File 2757, which passed in a 94-1 vote, comes as work is being done to restart a decommissioned nuclear facility in the state — Duane Arnold Energy Center in Palo. The company NextEra Energy plans to make the Duane Arnold Energy Center, which ceased operations in 2020, operational by 2029.

The tax exemptions in the bill both apply to projects like the Duane Arnold Energy Center, as well as efforts to start new nuclear energy facilities in Iowa. The original bill did not include an end date for the tax exemptions — meaning sales and use taxes related to personal property, certain digital products and services for nuclear energy facilities would be exempt from taxes indefinitely. The House amended the measure to include a 25-year sunset overall, in addition to stating that once a nuclear facility becomes commercially operational, the facility would no longer be eligible for the sales tax exemption.

The House also added a clawback provision. If a nuclear energy facility that receives a tax exemption does not commence or restart operations within 12.5 years, the owner of the facility would have to repay the entire amount of the sales tax exemption back to the state.

Rep. David Young, R-Van Meter, the bill’s floor manager, said the state wants to encourage nuclear energy production in Iowa — but wants to make sure the tax exemption goes toward projects that benefit the state.

“By putting in a 25-year sunset, we tell folks that this does not go on forever, and if you want to come to Iowa and try to put forth nuclear energy for our consumers and customers, then you better start it,” Young said.

The measure received bipartisan support, with only Rep. Beth Wessel-Kroeschell, D-Ames, voting against the bill. Rep. Eric Gjerde, D-Cedar Rapids, thanked Young for working with him to craft the amendment, saying the sales tax exemption will provide incentives to bring nuclear energy to the state.

“We know that nuclear energy is the future of energy,” Gjerde said. “And this piece of legislation tells everybody that Iowa is welcome to business and nuclear energy coming in. It is an economic development.”

During subcommittee meetings on the bill, Julie Voeck, executive director of regulatory and legislative affairs at NextEra Energy, said the effort to restart the Duane Arnold plant is projected to bring more than $9 billion in economic benefits for Iowa, alongside 400 full-time jobs in the Palo area.

The tax exemption will result in a loss in state revenue. According to a fiscal note from the Legislative Services Agency, the sales and use tax exemption for nuclear facilities would result in a net loss of $46 million in fiscal year 2027 across the general fund, Secure an Advanced Vision for Education (SAVE) fund and local option sales taxes. The revenue loss would decrease to $19.2 million in FY 2028, $13 million in FY 2029 and $6.5 million in FY 2030.

The measure goes to the Senate for further consideration. The other chamber has moved Senate File 2498, a companion to the House bill, through the committee process. While the Senate proposal similarly grants a tax exemption for nuclear facilities, it also seeks to require businesses receiving these tax breaks enter into an agreement with the Iowa Economic Development Authority.

This agreement would require at least 5% of the aggregate funding saved through the tax exemption to go to an Iowa regents university for the purpose of creating or maintaining a nuclear engineering program. While some speakers at the Senate subcommittee said the proposal could make Iowa less attractive for businesses considering building facilities in the state, Sen. Dan Dawson, R-Council Bluffs, said the proposal was a way to ensure businesses are investing in the state’s economy and workforce, rather than seeking tax breaks before abandoning Iowa facilities.

Iowa Capital Dispatch is part of States Newsroom, a nonprofit news network supported by grants and a coalition of donors as a 501c(3) public charity. Iowa Capital Dispatch maintains editorial independence. Contact Editor Kathie Obradovich for questions: info@iowacapitaldispatch.com.