Iowa R&D Tax Credit Explained for Businesses

Iowa and the R&D Tax Credit

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 Iowa R&D credit is generated from qualified research activities (QRAs) performed within the state.

Are you eligible?

Why choose us?

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Special Notes: 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.

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.

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Swanson Reed is one of the only companies in the United States to exclusively focus on R&D tax credit preparation. Swanson Reed’s office location at 699 Walnut Street, Des Moines, Iowa 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.

If you have any questions or need further assistance, please call or email our local Iowa Partner on (203) 680-9655.
Feel free to book a quick teleconference with one of our Iowa R&D tax credit specialists at a time that is convenient for you.

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Iowa R&D Tax Credit Filing Instructions

To claim the Research Activities Credit (R&D tax credit) in Iowa, businesses must first claim the federal R&D tax credit on Federal Form 6765, Credit for Increasing Research Activities. Subsequently, they need to file the appropriate Iowa state form. If a taxpayer elects to claim the regular Research Activities Tax Credit, they must file Iowa Form IA 128. Alternatively, if they choose the Alternative Simplified Research Activities Tax Credit, they should file Iowa Form IA 128S. These forms, along with supporting documentation for qualified research expenses incurred within Iowa, must be submitted with the taxpayer’s Iowa income tax return by the due date. Eligibility generally requires the business to be engaged in certain industries like manufacturing, life sciences, agriscience, software engineering, or aviation and aerospace.

R&D Tax Credit Training for IA CPAs

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R&D Tax Credit Training for IA CFPs

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R&D Tax Credit Training for IA SMBs

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Iowa Patent of the Year – 2024/2025

Bristola LLC has been awarded the 2024/2025 Patent of the Year for its innovative approach to cleaning inaccessible floors. Their invention, detailed in U.S. Patent No. 11883863, titled ‘Auger cleaned inaccessible floor system’, introduces a novel method for maintaining cleanliness in areas that are typically difficult to access.

This patented system features a floor equipped with a channel extending horizontally beneath its lowest point. The channel is designed to accommodate an auger cleaner, which is delivered via a gate complex connected to a box. When the gate is opened, the auger cleaner is inserted into the channel, allowing it to agitate and transport waste to a waste pipe for disposal. This design enables cleaning of the floor without the need for human entry, reducing labor costs and enhancing safety.

Additionally, the system includes a boom that facilitates the movement of the auger cleaner within the channel, and a sump pump to remove any fluid from the box. The integration of these components allows for efficient cleaning operations while maintaining the operational capacity of the floor system.

Bristola LLC’s innovation addresses a significant challenge in maintaining cleanliness in inaccessible areas, offering a safer and more efficient solution for industries requiring such systems.