Tax Climate Print E-mail

Iowa Corporate Income Tax
Iowa has a very progressive corporate income tax structure.  As a single-factor, non-unitary taxing entity, Iowa's tax is based only on the percentage of total sales income within the state.  In addition, Iowa offers a 50% deductibility of federal taxes from Iowa corporate income. Iowa is one of only five states that offer this important deductible.

Iowa also offers tax incentive programs that can also eliminate or reduce a business’ corporate income tax liability.

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 Activities 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 increased an additional 3% or 10% under certain programs.

Unemployment Insurance Rate
The rate for all new non-construction business is 1.9% 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.

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

Renewable Chemicals Production Tax Credit Program
Iowa offers the first of its kind in the nation, Renewable Chemicals Production Tax Credit Program. THe program addresses the unique opportunity to advance Iowa's economy by focusing onthe development of biomass as feedstocks for the production of renewable chemicals.

Business Friendly Employment Laws
Iowa is only one of the few states in the Midwest with progressive views on employment law. 

  • Iowa is a “Right to Work” state –means less union influence. 
  • Iowa has “At Will” employment laws – means you don’t need a reason to fire workers.
  • Iowa ranks as having the fifth best state legal liability system.