Iowa will provide tax incentives to nuclear energy projects in the state under a bill Gov. Kim Reynolds has signed supporting the state’s only nuclear energy facility as it looks to restart.
House File 2757 creates a sales tax exemption for construction, maintenance, or other costs related to restarting a decommissioned nuclear energy facility starting no sooner than Jan. 1, 2026.
The legislative push from state lawmakers comes as the use of artificial intelligence is expected to increase energy demand.
Reynolds has focused on the issue over the past two legislative sessions, advocating for advancing nuclear energy infrastructure in the state. This year, Reynolds established the Iowa Nuclear Energy Task Force.
“We need to take a serious look at nuclear energy. Its potential is amazing, but the investment is big and the horizon is long,” Reynolds said during her 2025 Condition of the State address to the Iowa Legislature.
While the incentives could apply to other facilities, the only start-up on the horizon is the recommissioning of the Duane Arnold Energy Center in Palo, Iowa’s sole nuclear facility.
Duane Arnold’s parent company, NextEra Energy, announced plans to restart the plant by 2029 alongside a 25-year agreement with Google to supply power for its expanding cloud and artificial intelligence infrastructure. The plant operated from 1974 until 2020, when a derecho damage it.
The legislation outlines which sections of a nuclear energy plant the sales tax exemption applies to, including nuclear reactors, safety systems and equipment, electrical generation equipment, energy storage and digital control systems.
It establishes a 25-year sunset on the sales tax exemption. The exemption will end once a facility becomes commercially operational.
The measure includes a clawback provision requiring repayment of the full tax benefit if a project fails to reach commercial operation within 12.5 years.
Lawmakers also created a nuclear energy workforce fund at Iowa’s three public universities aimed at bolstering the state’s nuclear energy workforce. The programs governed by the Iowa Board of Regents would be funded through an annual contribution of $2,200 for each megawatt approved by state regulators.
Regents are required to consider any recommendations on workforce needs outlined by Reynolds’ nuclear energy task force.
House and Senate lawmakers compromised on the provision following a dispute over whether to require nuclear energy facilities to contribute part of their sales tax exemption to develop a nuclear engineering program at one of Iowa’s three regents universities.
Reynolds approves hydrogen extraction standards
Reynolds also signed a bill Monday, June 1, creating a framework for underground hydrogen extraction in Iowa as interest in utilizing the energy resource grows.
Senate File 2490 will require a landowner’s written permission before a hydrogen extraction company can drill for the resource on their property. It requires 25% of landowners in a drilling unit to agree before a company can explore extraction.
Supporters of the measure contend it will help regulate the emerging industry and create protections for landowners.
As the measure moved through the legislative process, it drew criticism from landowners who argued it would weaken control over their land.
This article originally appeared on Des Moines Register: Kim Reynolds approves sales tax break for Iowa nuclear energy projects
Reporting by Maya Marchel Hoff, Des Moines Register / Des Moines Register
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