Iowa GOP gubernatorial candidate Zach Lahn wants to cut the state’s gas tax in half and ‘make data center companies pay for it.’
Out in Iowa, Republican incumbent governor Kim Reynolds is not seeking a third term, and Republican Zach Lahn is in a tough race against Democrat Rob Sand. Today Lahn announced a plan to cut Iowa’s tax on gas, diesel, and E-15 by 50 percent for six months.
Iowa’s gasoline tax is 30 cents per gallon of unleaded, 32.5 cents per gallon of diesel, and 26.5 cents per gallon of E-15.
Perhaps more intriguing is Lahn’s call to “make data center companies pay for it,” and his contention that “Big Tech has had a free ride from Iowans for a long time. They can afford to help our families and farmers right now.”
Iowa has 116 data centers. The state does offer incentives for data center construction; if a data center project spends more than $200 million, the data center business may purchase computer systems, cooling systems, power infrastructure, and electricity free from state sales tax. (There are also size, design, and construction standard requirements.) A data center project that spends more than $1 million can claim a partial refund of 50 percent of the Iowa sales tax paid on qualifying items.
One estimate from the left-of-center Good Jobs First put the value of those tax credits at $150 million per year, or $12.5 million per month.
In August alone, the state of Iowa collected $57.5 million in gas taxes (including all kinds and blends of gasoline); that monthly income has ranged from $45 million in June to more than $70 million in May. So the incoming taxes from data centers would offset the lost gas tax revenue for about five months.
Governments at all levels hunger for revenue, either for more spending projects (mostly preferred by Democrats) or to offset lost revenue for tax breaks (mostly preferred by Republicans). Data centers, by becoming the new lightning rod for modern discontent, are going to make an extremely popular target for the governors and state legislatures that win in 2026.