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The Ames region is a thriving hub for economic development and offers a host of financial incentives and boasts one of the most favorable business environments nationwide. Discover how these advantages can elevate your business prospects and enable you to achieve something truly remarkable.
On March 1, 2022, Iowa’s Governor signed a tax reform bill that will significantly reduce Iowa individual income tax rates and brackets for tax years beginning January 1, 2023 through December 31, 2025. A flat income tax rate will be implemented January 1, 2026 and will result in an average tax savings of over $1,300 per family. The state will provide the following tax rate reductions over this period of time:
Additionally, the tax reform legislation phases down the corporate income tax, with a target rate of 5.5 percent. Iowa’s tax is based only on the percentage of total sales income within the state. Thus, if a business has no sales in Iowa, it pays no Iowa corporate income tax.
Businesses entering into an agreement under the state’s training program and increasing their workforce by at least 10% qualify for this credit to their Iowa corporate income tax. The credit is equal to 6% of the state unemployment insurance taxable wage base. The credit for 2024 is $2,292 per employee. The tax credit can be carried forward up to 10 years.
A partially refundable credit for increasing research activities is up to 6.5% of the company’s allotted share of qualifying research expenditures in Iowa. A company must meet the qualifications of the federal research activities credit and be engaged in the manufacturing, life sciences, software engineering or aviation and aerospace industry to be eligible for the credit on the Iowa return. Companies approved for expansion under the High-Quality Jobs program may be eligible for the amount of the tax credit to be increased for qualifying research and development activities.
The purchase of industrial machinery, equipment and computers used in manufacturing or the processing of data by insurance companies, financial institutions or certain commercial enterprises is exempt from Iowa sales or use tax.
No sales tax is due on purchases of electricity or natural gas used in the manufacturing process.
There is no property tax on industrial machinery, equipment and computers.
Pollution control equipment is eligible for exemption from property tax. An application must be filed for exemption.
In Iowa, personal property is not assessed for tax purposes. Personal property includes corporate inventories for salable goods, raw materials and goods-in-process.
Provides qualifying businesses tax credits to offset the cost incurred to locate, expand or modernize an Iowa facility. To qualify for this 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 requirements.
The Iowa Industrial New Jobs Training (260E) program assists businesses creating new positions with new employee training. If a company is expanding operations, or locating a new facility in the state, the program can provide flexible funding to meet the wide variety of training and employee development needs for its new employees. The program is paid for by the new employees’ withholding taxes at no cost to the employee or the company.
Funding for rail and road improvements is available through the Iowa Department of Transportation.
Competitive incentive packages are offered by may of the metro communities, and can include direct financial assistance, infrastructure improvements, and property tax abatement. The Alliance facilitates discussions with local communities to evaluate incentives for prospective businesses.
City councils or county boards of supervisors may use the property taxes resulting from the increase in taxable valuation of industrial or commercial facilities to provide economic development incentives to a business or industry. Tax increment financing may be used to pay the cost of public improvements and utilities that will serve the new private development, to finance direct grants or loans to a company, or to provide a local match for federal or state economic development assistance programs. TIF does not increase a company’s property taxes, but it allocates the majority all of the increased taxes that are paid back to the city or county, where they may be spent to benefit the company.
Visit the Iowa Economic Development Authority website for a complete list of state tax advantages and incentives.
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