We present here the first quantum mechanical/molecular mechanics (QM/MM) studies of taurine/alpha-ketoglutarate dioxygenase (TauD) enzymes. Our studies are focused on the chemical properties of the oxo-iron species and the effect of the protein environment on its structural and electronic behavior. Although the active site region of TauD is very polar with many key hydrogen bonding interactions and salt bridges, the actual effect of the protein environment on the ordering and relative energies of the possible spin state structures is found to be quite small. Optimized geometries are very close to ones observed with density functional theory models that did not take the protein environment into consideration. The calculations show that protonation of the histidine ligands of iron is essential to reproduce the correct electronic representations of the enzyme. Hydroxylation studies of taurine by the oxo-iron active species predict that it is a very efficient catalyst that reacts with substrates via low reaction barriers.