Energy Replacement Generation Tax Exemption
Administered by Iowa Department of Revenue
If you generate electricity on-site for your own use—such as through wind, solar, or hydroelectric systems—you may be exempt from Iowa's replacement generation tax of $0.0006 per kWh, provided you own or lease the facility and consume all power on-site (minor inadvertent utility deliveries are allowed). To qualify, contact the Iowa Department of Revenue to confirm your system meets self-generator exemption requirements.
Customers installing on-site generation for self-consumption can benefit from exemption from Iowa's $0.0006/kWh replacement generation tax if the facility is wholly owned/leased by the customer and electricity is used exclusively on-site. Wind systems may also qualify if they're eligible for other state tax credits or special valuations. Verify exemption status with the Iowa Department of Revenue before project completion.
This exemption removes replacement generation tax liability ($0.0006/kWh) for qualifying facilities: methane conversion at public sanitary landfills, wind facilities eligible for tax credits or special valuations, university-owned/-leased generation for on-campus consumption, and self-generators consuming all output on-site. Large hydroelectric facilities (≥100 MW) pay a reduced rate of $0.000001847/kWh rather than exemption. Administration occurs through the Iowa Department of Revenue; applicants must demonstrate ownership/lease and end-use to qualify.
Program details
- Program ID
- 966
- Last updated
- 3/27/2026
Eligibility
- Sectors
- commercial industrial local government residential
- Technologies
- wind (all) hydroelectric landfill gas wind (small)
Program summary
Iowa imposes a replacement generation tax of $0.0006 per kilowatt-hour (kWh) on various forms of electricity generated within the state. This tax is imposed in lieu of a property tax on generation facilities.
Under the Energy Replacement Generation Tax Exemption, the following facilities are exempt from the replacement tax:
- All energy generated by methane gas conversion property to the extent the property is used in connection or conjunction with a publicly-owned sanitary landfill or used to collect waste that would otherwise be collected by or deposited with a publicly-owned sanitary landfill,
- Wind energy conversion property that is eligible for a tax credit or that is subject to the special valuation of wind energy conversion property, and
- Facilities owned by or leased to a state university or university of science and technology, to the extent electricity generated by such facilities is consumed exclusively by such state university or university of science and technology,
- Self-generators with on-site facilities. In order to qualify for the exemption, self-generators must wholly own or lease the facility in question and produce electricity solely for their own consumption, except for inadvertent unscheduled deliveries to their electric utility. However, facilities that do not consume all energy on-site are not required to pay the replacement tax on energy that is used to operate the facility.
In addition, large hydroelectric generators (100 megawatts or more) pay a reduced generation tax equivalent to $0.000001847 per kWh.
Contact & resources
- Contact email
- Bill.Blum@dnr.state.ia.us
- Additional resources
Please verify current program details with the administering agency before making any financial decisions.
