Expanding or new businesses coming into Lyon County may be eligible for property tax abatement, tax increment financing, job training and various state programs. Local and State programs vary by community and project. Custom proposals are prepared based on the company’s facility parameters, capital investment, jobs created or retained, and wage rates. Read on to learn more about Iowa’s tax structure and incentive programs.
Iowa Corporate Income Tax
A number of features of Iowa’s corporate income 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, High Quality Job Creation Programs or Enterprise Zone benefits.
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, 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.
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 Tax on Electricity or Natural Gas
No sales tax is due on purchases of electricity or natural gas used directly in the manufacturing process.
Research and Development Tax Credit
A refundable credit for increasing research activities is 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 in order to be eligible for the credit on the Iowa return.
Under Iowa law an employee may not be required to join a union or pay dues or fees to any labor union, association or organization as a condition of employment.
Iowa has one of the lowest, new employer, unemployment insurance rates in the nation.
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 application with the Department of Natural Resources (DNR) and other Iowa regulatory agencies. The mission of the Regulatory Assistance Program is to facilitate communication between the business and regulators and to expedite the permitting process.
- Tax Increment Financing (TIF) – City councils or county 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.
- Local Tax Abatement – Iowa law allows cities and counties to abate local property taxes for value added to industrial real estate. The maximum amount of actual value added at a new or expanded facility, which is eligible to exempt from taxation is as follows:
– Year One: 75%
– Year Two: 60%
– Year Three: 45%
– Year Four: 30%
– Year Five: 15%
- Commercial Property Tax Abatement programs – Many Lyon County communities provide commercial property tax abatement programs to assist businesses and developers locate or expand their businesses and grow employment in their communities. Some communities also offer residential property tax abatement programs to encourage single-family home construction.
- Direct Financial Assistance – Counties and communities have access to a variety of local and regional business growth incentive tools including revolving loan funds and local development corporation funds.
State of Iowa Incentives
The Iowa Economic Development Authority (IEDA) has programs designed to transform Iowa’s economy by creating high-quality jobs through business development and expansion across Iowa.
Employee Training Assistance
Northwest Iowa Community College (Sheldon) provides an array of employee training resources to help businesses maintain a competitive edge and administer the State of Iowa job training assistance programs including:
- Iowa New Jobs Training Program (260E) – Provides no cost or reduced-cost job training services to new employees of eligible businesses. The assistance can be used for basic skills training to highly specialized, customized training. Businesses entering into an agreement may also qualify for New Jobs Tax Credits.
- Iowa Jobs Training Program (260F) – Provides job training services to current employees of eligible businesses that are located in Iowa. The assistance can be used to train workers to learn new technologies, upgrade existing skills and enhance productivity in a variety of ways.