TAX CREDITS

High Quality Jobs Program: Companies that create or retain jobs and make capital investments may qualify for a variety of state and local incentives.  Available incentives include property tax exemptions, investment tax credits, sales and use tax refunds, and an expanded Research Activities Credit.  New and retained jobs must meet specific wage thresholds to qualify for the program.  These thresholds are based on the wages of the laborshed area where the project is located. The Iowa Department of Workforce Development (IDWD) has identified employment centers within the state and the boundaries of each laborshed area, which are based on the commuting patterns of area workers.  To receive this incentive, newly created jobs must pay 100% of the laborshed wage at the start of the project and increase to 120% of the laborshed wage within 3 years.  Retained jobs must have wages of at least 120% of the laborshed wage.  Businesses that locate or expand in economically distressed counties must pay wages of at least 100% of the laborshed wage throughout the life of the project.

New Jobs Tax Credit: Provides a one-time corporate income tax credit to businesses that increase the size of their workforce by at least 10% and participate in the New Jobs Training (260E) Program. The maximum credit per new job is $1,758.  Tax credits are non-refundable and non-transferable; however unused tax credits may be carried forward for up to 10 years.

Research Activities Tax Credit: All businesses within the state that meet the qualifications of the federal research credit may claim the Iowa Research Activities Tax Credit which is equal to 6.5% of qualified research expenditures in Iowa above a base amount.  Supplemental research credits are available to companies that participate in the High Quality Jobs Program. Any research credit in excess of the tax liability may be refunded to the taxpayer or credited for the following year.

Economic Development Set-Aside (EDSA): Businesses that create or retain jobs in counties or cities with fewer than 50,000 residents (except communities designated as HUD entitlement areas) may qualify for a direct or forgivable loan of up to $1 million.  To be eligible for a loan under this discretionary program, a company must demonstrate proof of a funding gap, locational disadvantage or insufficient return on investment.  In addition, jobs created or retained must pay at least 80% of the area laborshed average and at least 51% of these positions must be filled by low and moderate income individuals as defined by the U.S. Department of Housing and Urban Development.

JOB TRAINING

Iowa Industrial New Jobs Training (260E): Administered by Iowa's 15 community colleges, this discretionary training program is financed through bonds sold by the colleges. Depending on the wages of the trainees, a business will divert 1.5% or 3.0% of its Iowa state withholding taxes generated by the new positions to the community college to retire the bonds.  This structure enables the training to be of low to no cost since the bonds are retired with dollars that otherwise would have been paid to the state as withholding taxes.  

Last updated: May 2017


 
BIGGINS LACY SHAPIRO & COMPANY
 
PRINCETON
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Princeton, NJ 08542
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