Our Georgia clients frequently ask us to investigate potential credits and incentives in other states where they have operations, potential acquisitions or strong relationships with customers or vendors. In addition, private equity groups ask us about potential $$ for their portfolio companies.
We were recently asked about credits and incentive in Iowa. I spoke withBeth Balzer, Iowa’s Team Leader for site selection consultants, and learned some of the specifics.
Iowa’s tax credits and incentives cover new jobs, investments, workforce training, research and development activities, and sales tax exemptions. Incentives and credits are limited to targeted industries that include manufacturing, biosciences, and financial services, among others.
- Investment tax credits are blended with job increases and are tied to Enterprize Zones or “High Quality Jobs” high wage levels. Sometimes cash $$ awards are also available.
- A tax credit for new jobs can be earned for increasing employment by 10% and contracting with the local community college for a workforce training program (260E Program).
- A training program for existing employees (260F Program) can result in cash grants (not tax credits) to offset retraining activities.
- The Research and Development tax credit is tied to the federal R&D credit and is refundable, meaning it can be used even if the company doesn’t have enough tax liability to cover the amount.
Compared to Georgia, Iowa has:
- Similar corporate and personal tax rates, which means that state tax credits are beneficial to business owners.
- A narrower range of companies that are eligible
- Better/more coordination of all possible credits and incentives
- More clawbacks and gotchas if the company doesn’t hit the targets
- No credits or incentives without some form of state pre-approval
To summarize, Iowa seems very welcome to new and expanding businesses that fit their target industry profiles. I spoke with several people there and learned that once engaged, a company can expect comprehensive guidance all the way through to the end of a project. But, realize that no activities count that are started before the required application process.
Do any of your clients have Iowa connections? If so, Iowa professionals will be very helpful in finding incentives. But make sure you start early in the planning process!