Iowa R&D Tax Credit Summary

IOWA R&D TAX CREDIT SUMMARY

Iowa State R&D Tax Credits

Research expenses qualified for the Iowa Research Activities Tax Credit are based on the rules governing the federal research tax credit. Iowa offers two methods for calculating the R&D credit—the regular research credit or the alternative simplified research activities credit.

Iowa State Regular Research Activities Tax Credit

A research activities credit is allowed for 6.5% of Iowa’s apportioned share of qualifying expenditures for increasing research activities in the state above the base amount or 50% of the qualified research expenditures. Any research credit in excess of the tax liability may be refunded to the taxpayer or credited for the following year.

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    Qualified expenditures in Iowa are:

    • Wages for qualified research services performed in Iowa
    • Costs of supplies used in conducting qualified research in Iowa
    • Rental or lease cost of personal property used in Iowa in conducting qualified research
    • 65% of contract expenses paid by a corporation to a qualified organization for basic research performed in Iowa

    “Research activities” include the development and deployment of innovative renewable energy generation components manufactured or assembled in Iowa.

    The term “innovative renewable energy generation components” does not include a component with more than 200 megawatts of installed effective nameplate capacity. The tax credits for innovative renewable energy generation components cannot exceed $2 million.

    How to obtain the credit?

    Fill out Form IA 128.

    Refundable/Transferable Tax Credit- Yes

    Carryforward

    Not Applicable

    Iowa State Alternative Simplified Research Activities Credit

    In lieu of the 6.5% basic research activities credit, the alternative simplified credit is 4.55% percent of the difference between the qualified research expenditures for the current year and 50% of the average of the qualified research expenditures for the prior three years.

    How to obtain the credit?

    Fill out Form IA 128S.

    Refundable/Transferable Tax Credit- Yes

    Carryforward

    Not Applicable

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