Information on the Iowa R&D Tax Credit:
The Iowa R&D credit is generated from qualified research activities (QRAs) performed within the state. Qualifying activities are defined in Section 41 of the Internal Revenue Code as “a new or improved function, performance, or reliability or quality.”
Process improvement activities include:
- Identifying uncertainty concerning the development or improvement of a business component;
- Identifying one or more alternatives intended to eliminate that uncertainty; and
- Identifying and conducting a process of evaluating the alternatives (e.g., through modeling, simulation, or a systematic trial-and-error methodology).
The R&D Tax Credit is a credit that is available across various industries, such as:
- Food and Beverage
- Oil and Gas
State Credit Name: The Iowa Research Activities Tax Credit
Expiration Date: Indefinite
Who Can Apply? Corporations and flow-through entities
Credit Carry Forward: A fully refundable credit, therefore no carry forward.
About the Credit: The credit can be calculated using the regular credit or the alternative simplified credit method.
- The regular credit is 6.5% of the lower QRE’s that exceed a base amount or 50% of QRE’s.
- The alternative simplified credit is 4.55% of QRE’s for the past 3 years.
Notes: Companies awarded by the Iowa Economic Development Authority under the Enterprise Zone Program or the High Quality Jobs Program can calculate a Supplemental Research Activities Credit, which is an additional 10% of the company’s qualifying incremental research expense for gross revenue less than $20 million and 3% for a company with gross revenue over $20 million. The Supplemental Research Activities Credit must be calculated using the same method that was used to calculate The Iowa Research Activities Credit.
Click here to find out if you qualify for the federal research credit.
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