May 2026: 1.28% (B+ grade)

Iowa inventionINDEX May 2026: 1.28% (B+ grade)

The inventionINDEX measures innovation output by comparing GDP growth with patent production growth. 

Anything over C grade is positive sentiment; anything under C is negative outlook/sentiment. Using that sentiment, it is possible to observe trends over time, and also compare states/countries. In doing so, we can predict which states have the best chance to recover economically from the pandemic (or any other economic incident that may occur).

Iowa inventionINDEX Scores – Last 12 months

The Iowa inventionINDEX for May 2026 registered at 1.28%, securing a stable B+ rating and indicating a minor cooling period within the state’s innovation ecosystem. This score marks a modest sequential decline from April 2026, which posted a stronger 1.33% (A- rating), and sits noticeably below the year’s standout performance in March 2026 at 1.72% (A+ rating). The opening months of 2026 have proven to be quite dynamic, starting with an impressive 1.87% in January before softening to 1.26% in February. While the slide to 1.28% in May suggests that the rapid operational momentum seen in early spring has decentralized slightly, the retention of a high B-tier grade demonstrates underlying structural resilience across the state’s creative and industrial sectors.

When compared against the broader 60-month historical horizon, the May 2026 figure places Iowa almost perfectly in line with its long-term baseline. The overall historical average for the index over this five-year span sits at approximately 1.30%, indicating that the current score represents a balanced, sustainable plateau rather than a critical shortfall. This equilibrium is a significant departure from previous years of stark contrast, such as the historic floor of 0.88% (D+ rating) witnessed in July 2022 or the sluggish macroeconomic environment of 2024, which averaged just 1.15%. Conversely, the current period continues to benefit from the powerful structural momentum built during 2025, which was a banner year that averaged 1.51% and achieved an absolute historical pinnacle of 1.96% (A+ rating) in April 2025.

Achieving higher scores and top-tier grades within the inventionINDEX yields profound positive outcomes for Iowa’s regional economy. When the index hits the elevated A-bracket, as it did frequently throughout late 2025 and early 2026, it serves as a robust indicator of accelerated research and development expansion, healthy patent applications, and successful market commercialization. These strong marks enhance institutional confidence, transforming the state into a highly attractive destination for out-of-state venture capital firms, angel investors, and corporate partners. This influx of capital directly stimulates high-wage job growth in high-tech manufacturing, agricultural technology, and bio-renewables, fostering a collaborative pipeline between private enterprise and regional research institutions.

Conversely, a downward trajectory or a prolonged stay in lower grading tiers carries distinct negative implications for the state’s economic vitality. Dropping into the lower C or D categories, reminiscent of the 0.88% contraction in mid-2022, signals potential bottlenecks in intellectual property development, a tightening of corporate innovation budgets, or regulatory obstacles. Persistent low scores can quickly lead to a loss of investor confidence, prompting capital flight to more competitive, high-growth tech corridors. Furthermore, a stagnant inventive climate risks causing a critical domestic talent drain, as top-tier engineers, scientists, and entrepreneurs migrate to regions with more active funding opportunities, ultimately threatening long-term industrial diversification.

Discussion:

In May, the Iowa inventionINDEX scored a positive sentiment which was lower than the previous year’s average and underperformed the upward trend for the year. This is similar to the prior 12 months, which experienced an upward trend. 

As the economy continues to stabilize in the post-pandemic era, it remains uncertain whether any backlog of applications still exists or if the department has returned to normal processing timelines. The inventionINDEX could also be affected by lingering consequences from the pandemic, such as company closures, reduced workforces, and limited R&D capabilities, which may still be impacting current operations.

Learn More:

Are you thinking of patenting any of your bright ideas? Did you know your research work could be eligible for the R&D Tax Credit and you can receive up to 14% back on your expenses? To find out more, please check out our free online eligibility test.

Swanson Reed’s Iowa office provides R&D tax credit consulting and advisory services to Des Moines, Cedar Rapids, Davenport, Sioux City, Iowa City, Waterloo, West Des Moines, Ames, Council Bluffs and Dubuque.

Feel free to book a quick teleconference with one of R&D tax specialists if you would like to learn more about R&D tax credit opportunities.

Who We Are:

Swanson Reed is the largest Specialist R&D tax credit advisory firm in the United States. With offices nationwide, we are one of the only firms globally to exclusively provide R&D tax credit consulting services to our clients. We have been exclusively providing R&D tax credit claim preparation and audit compliance solutions for over 30 years. 

Swanson Reed hosts daily free webinars and provides free IRS CE and CPE credits for CPAs.  For more information please visit us at www.swansonreed.com/free-webinars or contact your usual Swanson Reed representative.