Effective July 1, 2026, a qualifying nuclear electric generation facility can claim a sales and use tax exemption for certain purchases it makes before beginning or restarting commercial operation. A facility may also register as a designated exempt entity, allowing the tax-free purchase of building materials, supplies, equipment, and services for a construction contract with the facility. For a facility restarting after a period of decommissioning, this exemption applies to purchases made on or after January 1, 2026.
List items for Nuclear Electric Generation Facility Exemption
Relevant Law
2026 Iowa Acts, House File 2757
"Nuclear electric generation facility" means a facility commencing or restarting commercial operations of at least one unit of the facility on or after January 1, 2028, that is located in this state, uses nuclear fission, fusion, or other nuclear processes to generate electricity for sale or for use in the transmission or distribution grid and is licensed by the federal nuclear regulatory commission. A "nuclear electric generation facility" includes facilities undergoing restart after a decommissioning period and facilities in advanced stages of development or obtaining federal licensing from the United States Nuclear Regulatory Commission.
To claim these incentives, the nuclear electric generation facility must enter into an agreement with the Iowa Economic Development Authority. This agreement must include all of the following information:
- The person entering into the agreement with the authority.
- The date when a nuclear electric generation facility is eligible for the sales and use tax exemption.
- The date on which commercial operation of the facility is expected to commence.
- The date on which the repayment provision is triggered if the facility has not commenced commercial operation.
- Approval of the nameplate capacity for the nuclear electric generation facility by the Iowa Utilities Commission.
- The due date for contributions to the Nuclear Energy Workforce Fund.
- Proof of the initial contribution to the Nuclear Energy Workforce Fund.
For more information on entering into an agreement, contact the Iowa Economic Development Authority.
A nuclear electric generation facility can claim a sales and use tax exemption for its qualifying purchases of tangible personal property, specified digital products, and taxable services. Exempt purchases must be directly and primarily used in any of the following:
- Site preparation.
- Construction.
- Reconstruction.
- Expansion.
- Replacement.
- Alteration.
- Repair.
- Safe storage.
- Restarting after a period of decommissioning of the nuclear electric generation facility.
The exemption ends when the facility begins commercial operation. The facility’s purchases on or after this date are taxable unless another exemption applies. “Commercial operation” means the date on which a nuclear electric generation facility delivers notification to the applicable regional transmission operator that the nuclear electric generation facility has begun operating.
Documentation: To prove eligibility, the facility should retain all invoices and other records for exempt purchases by the facility and its contractors and subcontractors. The facility should retain these invoices and other records for at least three years after it begins or restarts commercial operation.
A facility awarding a construction contract may register as a designated exempt entity. Once the registration is approved, the facility may issue special exemption certificates to contractors and subcontractors, allowing them to purchase, or withdraw from inventory, building materials, supplies, equipment, or services for the contract free from sales tax. For more information on the designated exempt entity program, see Construction Contracts with Designated Exempt Entities.
Documentation: When registering as a designated exempt entity, the nuclear electric generation facility should provide information and documentation to show it qualifies as a “nuclear electric generation facility“ as defined in 2026 Iowa Acts, House File 2757. The facility should provide a copy of its agreement with the Iowa Economic Development Authority once it is available. The Department may also request additional information.
After the facility registers as a designated exempt entity, the facility gains access to special exemption certificates. The facility may issue these special exemption certificates to its contractors and subcontractors. The contractors and subcontractors may use these special exemption certificates to purchase, or withdraw from inventory, building materials, supplies, equipment, and services for the construction contract free from sales tax.
The nuclear electric generation facility must file an annual report with the Department to maintain its eligibility for this exemption and as a designated exempt entity. The report is due annually on January 31 after the facility first registers as a designated exempt entity. The report must include the following information:
- The aggregate sales price amount of exempt tangible personal property or digital products sold and services furnished from the previous calendar year under the exemption, including for information purposes only, tangible personal property, specified digital products, and services that are also exempt under another exemption.
- Evidence the facility made the required contribution to the Nuclear Energy Workforce Fund in the previous calendar year.
The final annual report is due January 31 after the facility begins or restarts commercial operation. When filing its final annual report, the facility should provide a copy of its notice to the applicable regional transmission operator that the facility has begun operating.
Instead of an exemption, a nuclear electric generation facility may also claim a refund of sales or use tax paid. The facility can claim a refund by filing an IA 843 Refund Return (247.43 KB) Archived .pdf .
If the nuclear electric generation facility fails to make the full required contribution to the Nuclear Energy Workforce Fund during a calendar year, the facility must repay any sales and use tax exemptions and refunds it claimed in that year.
The facility must begin or restart commercial operation within twelve and one-half years, as described in its agreement with the Iowa Economic Development Authority. If the facility does not begin or restart commercial operation by this date, the facility must repay the entire amount of sales and use tax exemptions and refunds the facility claimed. The facility must also repay the entire amount of sales and use tax exemptions its contractors and subcontractors claimed for a construction contract with the facility as a designated exempt entity.
When the nuclear electric generation facility makes exempt purchases, it should complete one of the following exemption certificates:
- Use the Iowa Sales Tax Exemption Certificate: Energy Used in Processing or Agriculture (31-113) (135.8 KB) Archived .pdf to claim an exemption for fuel used to create heat, power, or steam, for fuel used to generate electric current, or for electricity or gas. Under “Reason for exemption,” the facility should check “Other” and enter “Nuclear Facility.”
- Use the Iowa Sales/Use/Excise Tax Exemption Certificate (31-014) (223.11 KB) Archived .pdf for all other exempt purchases. Under the Section “Purchaser is claiming exemption for the following reason,” the facility should check “Other” and enter “Nuclear Facility.”
The facility should give the completed certificate to its seller. Its seller should retain the certificate in its records.
After the facility registers as a designated exempt entity, the facility gains access to special exemption certificates. The facility may issue these special exemption certificates to its contractors and subcontractors. The contractors and subcontractors may use these special exemption certificates to purchase, or withdraw from inventory, building materials, supplies, equipment, and services for the construction contract free from sales tax.