Iowa Corporate Income Tax

Iowa’s corporate income tax may be reduced or eliminated through Iowa’s Tax Incentive programs.

Other advantages include:

Federal deductibility

50% deductibility of federal taxes from Iowa corporate income.  Iowa is one of only five states that offers this important deductible.

Single-factor, nonunitary tax

A single-factor, nonunitary tax-Iowa’s tax is based only on the percentage of total sales income within the state.

Unemployment Insurance Rate

Iowa has the lowest new employer unemployment insurance rate in the nation. The rate for all non-construction business is 1% for a three-year period until an experience rating is established. Iowa offers a zero rate for good experience; approximately 45% of Iowa employers are at a zero rate.

No personal Property Tax

Personal property is not assessed for tax purposes. In Iowa, personal property includes corporate inventories of goods-in-process, raw materials and salable goods.

No Sales and 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, financial institutions, or certain commercial enterprises, is exempt from Iowa sales or use tax. In addition, there is no sales tax on materials used in the manufacturing process or for purchases of electricity or natural gas used directly in the manufacturing process.

No Property Tax on New Industrial Machinery, Equipment and Computers

Manufacturing, machinery, equipment, and computers are exempt from property tax.

Research and Development Tax Credit

A refundable credit for increasing research activities is up to 6.5 % of the company’s allotted share of qualifying research expenditures in Iowa. This can also be doubled under certain programs.

Local Tax Abatement

Iowa law allows cities and counties to abate local property taxes for improving industrial real estate.

Tax Increment Financing

City councils or boards of supervisors may use the property taxes resulting from the increase in taxable valuation caused by the construction of new industrial or commercial facilities to provide economic development incentives to a business.

Workers Compensation

Iowa’s worker compensation costs are among the nation’s lowest. The average cost workers’ compensation insurance for manufacturers in Iowa is 25% lower than the national average.

Unemployment Insurance

Iowa has the lowest new employer unemployment insurance rates in the nation. 

Regulatory Assistance

The Regulatory Assistance Program enhances the range of services available to Iowa companies by advising and assisting companies in the preparation and submission of permit applications with the Iowa Department of Natural Resources (IDNR) and other Iowa regulatory agencies. The purpose of the Regulatory Assistance Program is to facilitate communication between the business and regulators and to expedite the permitting process.