Corporate Income Tax
A number of features of Iowa's corporate tax offer significant advantages when compared to other states' corporate taxes. - Fifty percent deductibility of federal taxes from Iowa corporate income tax.
- Single-factor, non-unitary tax. Iowa's tax is based only on the percentage of total sales income within the state.
- Iowa corporate income tax may be reduced or eliminated by the New Jobs Tax Credit and the Enterprise Zone Tax Credit.
Business Tax Credit Programs
Brownfield/Grayfield Tax Credit Program - Qualifying projects can get tax credits of 24% of qualifying costs of a Brownfield projects and 30% if the project meets green building requirements. Grayfield projects can get tax credits of 12% of qualifying costs and15% if the project meets green building requirements.
High Quality Jobs Program - The High Quality Jobs Program provides qualifying businesses tax credits to off-set the cost incurred to locate, expand or modernize an Iowa facility. To qualify for this very flexible assistance package that includes tax credits, exemptions and/or refunds, a business must be a non-retail or non-service business and meet wage threshold requirements. The following tax incentives may be available:
- Local property tax exemption of up to 100% of the value added to the property to a period not to exceed 20 years.
- Refund of state sales, service, or use taxes paid to contractors or subcontractors during construction.
- For distribution center projectcs, a refund of sales and use taxes paid on racks, shelving, and conveyor equipment.
- Investment tax credit equal to the percentage of the qualifying investment, amortized over five years.
- State's refundable research activities credit may be doubled while the business is participating in the program
New Jobs Tax Credit - A business entering into an agreement under the Iowa New Jobs Training Program and increasing its Iowa workforces by a least 10 percent will qualify for this Iowa corporate income tax credit. - This tax credit is equal to up to 6 percent of the state's unemployment insurance taxable wage base.
- The maximum credit for 2009 is $1,442 per new position created.
- The credit may be taken only once; however, unused credits can be carried forward for up to 10 years.
Research & Development Tax Credit - A credit for increasing research activities is 6.5 percent of the company's allotted share of qualifying research expenditures in Iowa. A company must meet the qualifications of the federal research activities credit in order to be eligible for the credit on the Iowa return.
Please contact The Alliance to determine eligibility or to obtain information specific to your needs.
No Sales or Use Tax on Manufacturing Machinery and Equipment Purchases
The purchase of industrial machinery and computers assessed as real property and used for manufacturing or used to process data by insurance companies, and financial institutions is exempt from property tax. Pollution control equipment is eligible for exemption from property tax.
No Property Tax on New Industrial Machinery and Equipment
Manufacturing machinery and equipment, as well as, computers used to process data by insurance companies and financial institutions is exempt from property tax. Pollution control equipment is eligible for exemption from property tax.
No Personal Property (Inventory) Tax
Personal property is not assessed for tax purposes. In Iowa, personal property includes corporate inventories of salable goods, raw materials and goods-in-process.
No Sales and Use Tax
No sales tax is due on purchases of electricity or natural gas used in the manufacuturing process.
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