Tax breaks

2020 snapshot

Exemptions, deductions and exclusions

The Department of Revenue hasn’t updated this study since 2020. These are its estimates for tax year 2020 (property tax: 2018 assessments). Iowa has since cut income tax rates to one flat rate and stopped taxing retirement income, so the income tax figures, especially, are out of date².

Every break in the study

42 breaks in tax credits.

• Research Activities Tax Credit$77.4M
  Tax credits (Corporation and Individual Income) · Credit · Business Incentive · Iowa Code 15.119, 15.335, 15A.9(8), 15E.196(4), 422.10, 422.33(5)A refundable Research Activities Tax Credit is available for increased research activities by companies in Iowa. The credit is based on the federal research tax credit, with the Iowa credit based on the ratio of Iowa research expenditures over total research expenditures.
• Earned Income Tax Credit$72.3M
  Tax credits (Individual Income) · Credit · Family Support · Iowa Code 422.12BThis credit is available to individual taxpayers who qualify for the federal earned income tax credit. The credit is equal to 15 percent of the federal earned income tax credit for tax years 2014 and beyond. The federal credit amount varies by income, marital status and number of dependents claimed.
• S Corporation Apportionment Tax Credit$50.9M
  Tax credits (Individual Income) · Credit · Administrative · Iowa Code 422.8(2)(b)Individual resident shareholders of S-corporations which conduct business within and without Iowa can claim the S-Corporation Apportionment Tax Credit.
• Historic Preservation Tax Credit (Various tax types)$24.5M
  Tax credits · Credit · Community Development Support · Iowa Code 404A, 422.11D, 422.33(10), 422.60(4), 432.12AA refundable Historic Preservation Tax Credit is awarded for 25 percent of the qualified costs of rehabilitation of eligible property in Iowa. To qualify, the property or district must be designated as historically significant. Barns constructed before 1937 are also eligible.
• Iowa New Jobs (260E) Withholding Tax Credit$23.9M
  Tax credits (Individual Income) · Credit · Business Incentive · Iowa Code 260E, 15A.8An Iowa New Jobs Training (260E) Withholding Tax Credit is available to assist businesses that create new positions through new employee training. The tax credits are available to businesses that enter into a 260E agreement with an Iowa community college to participate in training.
• Franchise Tax Credit$22.5M
  Tax credits (Corporation and Individual Income) · Credit · Administrative · Iowa Code 422.11, 422.33(8)A nonrefundable Franchise Tax Credit can be claimed by shareholders in a financial institution that elects to file as an S corporation for federal income tax purposes and have its income taxed directly to the shareholders.
• High Quality Jobs Program - Investment Tax Credit (Various tax types)$21.7M
  Tax credits · Credit · Business Incentive · Iowa Code 15.119, 15.326A nonrefundable Investment Tax Credit is awarded by the Economic Development Authority to businesses who complete an agreement to create or expand their business and/or create jobs in Iowa. The amount of the credit is generally no more than ten percent of the business’ investment. The credits may not be sold or traded.
• Biodiesel Blended Fuel Tax Credit$20.1M
  Tax credits (Corporation and Individual Income) · Credit · Business Incentive · Iowa Code 422.11P, 422.33A refundable Biodiesel Blended Fuel Tax Credit is available to retail dealers who sell biodiesel blended fuel through motor fuel pumps during the tax year. The credit is equal to $0.035 to $0.055 per gallon of biodiesel blended fuel sold, depending on the proportion of biofuel in biodiesel blended gallons.
• Tuition and Textbook Tax Credit$14.8M
  Tax credits (Individual Income) · Credit · Education Support · Iowa Code 422.12(2)(b)The Tuition and Textbook Tax Credit is equal to 25% of up to $2,000 of qualifying expenditures per dependent in grades kindergarten through grade 12 at an accredited Iowa nonprofit school adhering to the provisions of the United States Civil Rights Act of 1964 can be claimed.
• Iowa New Jobs (260E) Supplemental Withholding Tax Credit$13.7M
  Tax credits (Individual Income) · Credit · Business Incentive · Iowa Code 260E, 15A.7An Iowa New Jobs Training (260E) Supplemental Withholding Tax Credit is available to businesses with a 260E agreement with an Iowa community college to create new positions through new employee training and who have an Enterprise Zone award from Economic Development Authority.
• School Tuition Organization Tax Credit$11.6M
  Tax credits (Corporation and Individual Income) · Credit · Education Support · Iowa Code 422.11S, 422.33(27)The nonrefundable School Tuition Organization Tax Credit is available to taxpayers who make a voluntary contribution to a school tuition organization (STO). The amount of the credit was equal to 65 percent of the contribution made to an STO in tax years 2020 and earlier.
• Workforce Housing Tax Incentive Program (Various tax types)$9.4M
  Tax credits · Credit · Business Incentive · Iowa Code 15.351, 422.11F, 422.33(15)Credit equals 10% of the new investment directly related to the building or rehabilitating of single-family homes or multiple dwelling units. Unused credits may be carried forward for five years or until depletion. The tax credit is transferable.
• Redevelopment Tax Credit (Various tax types)$8.2M
  Tax credits · Credit · Business Incentive · Iowa Code 15.291, 15.293, 422.11V, 422.33(25), 422.60, 432.12L, 533.329(n)The nonrefundable Redevelopment Tax Credit is available to taxpayers that invest in redeveloping a Brownfield or grayfield site.
• Iowa Alternative Minimum Tax Credit (Various tax types)$7.5M
  Tax credits · Credit · Administrative · Iowa Code 422.11B, 422.33(7), 422.60(3)A taxpayer may be eligible for the nonrefundable Minimum Tax Credit if they paid Iowa minimum tax in previous years based on tax preferences and adjustments.
• Targeted Jobs Withholding Tax Credit$6.9M
  Tax credits (Individual Income) · Credit · Business Incentive · Iowa Code 403.19A, 422.16A Targeted Jobs Withholding Tax Credit is awarded to employers who enter into an agreement with pilot project cities approved by the Economic Development Authority.
• Child and Dependent Care Tax Credit$6.8M
  Tax credits (Individual Income) · Credit · Family Support · Iowa Code 422.12CThe Child and Dependent Care Tax Credit is a tax credit computed as a percentage of the federal child and dependent care tax credit allowed in Section 21 of the Internal Revenue Code. The credit is refundable, meaning a claim may exceed computed tax.
• Beginning Farmer Tax Credit$5.3M
  Tax credits (Corporation and Individual Income) · Credit · Agriculture Support · Iowa Code 422.11M, 422.33(22)A nonrefundable Agricultural Assets Transfer Tax Credit is awarded for agricultural assets that are subject to a lease or rental agreement. The renter must qualify as a beginning farmer as defined in Code section 175.12. The lease must be for a term of at least two years, but not more than five years.
• Endow Iowa Tax Credit (Various tax types)$5.1M
  Tax credits · Credit · Charitable Organization Support · Iowa Code 15E.305, 422.11H, 422.33(14), 422.60(7), 432.12D, 533.329A nonrefundable Endow Iowa Tax Credit is awarded, equal to 25 percent of a taxpayer’s endowment gift (up to 5 percent of aggregate annual limit, or $300,000, for a single taxpayer) to a qualified community foundation. The gift must be for a permanent endowment fund established to benefit a charitable cause in Iowa.
• Renewable Energy Tax Credit (Various tax types)$4.7M
  Tax credits · Credit · Business Incentive · Iowa Code 476C, 476.48, 422.11J, 422.33(16), 422.60(8), 432.12E, 423.4(4), 437A.17BThe nonrefundable Renewable Energy Tax Credit is available for a producer or purchaser of energy from an eligible renewable energy facility. The amount of the credit depends on the amount of energy generated. The facilities must be approved by the Iowa Utilities Board. The credits can be transferred.
• Accelerated Career Education Withholding Tax Credit (Withholding)$4.2M
  Tax credits · Credit · Business Incentive · Iowa Code 260G, 422.16An Accelerated Career Education Withholding Tax Credit is awarded to Iowa businesses who contract with Iowa's community colleges to sponsor training spots for potential employees.
• Solar Energy System Tax Credit (Various tax types)$4.0M
  Tax credits · Credit · Business Incentive · Iowa Code 422.11L, 422.33(29), 422.60(12a), 533.329Credit equals 50% of the federal credit available for solar energy systems installed on residential properties, limited to $5,000. Credit equals 50% of the federal credit for solar energy systems installed on business properties and is limited to $20,000.
• E15 Plus Gasoline Promotion Tax Credit$2.8M
  Tax credits (Corporation and Individual Income) · Credit · Business Incentive · Iowa Code 422.11YCredit equals 3 cents per gallon of E15-E69 sold for the period beginning January 1 and ending May 31st; 10 cents per gallon sold during the period beginning June 1 and ending September 15th; and 3 cents per gallon sold of rate period beginning September 16 and ending December 31st. The credit is refundable.
• E85 Gasoline Promotion Tax Credit$2.6M
  Tax credits (Corporation and Individual Income) · Credit · Business Incentive · Iowa Code 422.11O, 422.33A refundable E85 Gasoline Promotion Tax Credit is available to retail dealers of gasoline who sell E85 gasoline through motor fuel pumps during the tax year. The credit was equal to $0.16 per gallon of E85 sold during 2020.
• Innovation Fund Tax Credit (Various tax types)$2.6M
  Tax credits · Credit · Business Incentive · Iowa Code 15.119, 15E.52, 422.11Z, 422.33(13), 422.60, 432.12M, 533.329A 25 percent tax credit is allowed for investments in an innovation fund certified by the Iowa Economic Development Authority (IEDA). The certified Innovation Funds make investments in promising early-stage companies that have a principal place of business in the state of Iowa.
• Renewable Chemical Production Tax Credit Program$2.0M
  Tax credits (Corporation Income) · Credit · Business Incentive · Iowa Code 15.119A Renewable Chemical Production Tax Credit is available to eligible businesses that apply to the Economic Development Authority (EDA) for the credit. The tax credit is equal to $0.05 per pound of renewable chemicals produced from biomass feedstock in this state.
• Angel Investor Tax Credit FKA Venture Capital Tax Credit - Qualifying Business (Various tax types)$1.9M
  Tax credits · Credit · Business Incentive · Iowa Code 15E.41, 422.11F, 422.33(12), 422.60(5), 432.12C, 533.329(h)A nonrefundable Angel Investor Tax Credit is awarded to investors making equity investments into a qualifying business or community-based seed capital fund approved by the Iowa Economic Development Authority. The 25 percent credit is focused on angel investors who make investments in start-up companies.
• Iowa New Jobs (260E) Income Tax Credit$1.9M
  Tax credits (Corporation and Individual Income) · Credit · Business Incentive · Iowa Code 260E, 422.11A, 422.16A, 422.33(6)A nonrefundable Iowa New Jobs Training (260E) Income Tax Credit is equal to 6 percent of the taxable wages which the employer is required to contribute to the state unemployment compensation fund for each new job created under the program.
• Adoption Tax Credit$1.4M
  Tax credits (Individual Income) · Credit · Consumer Benefit · Iowa Code 422.12ACredit equals expenses paid or incurred for the adoption in Iowa up to $5,000. Any credit that exceeds the taxpayer's liability is refundable. The Iowa itemized deduction is still available for expenses not claimed under the credit.
• Volunteer Firefighter and Emergency Medical Services Personnel and Reserve Peace Officer Tax Credit$1.3M
  Tax credits (Individual Income) · Credit · Consumer Benefit · Iowa Code 422.12$250 credit available for volunteer firefighters, emergency medical service providers, and reserve peace officers. If none of these work the entire year they can still get a credit prorated by months served.
• Geothermal Heat Pump Tax Credit$1.1M
  Tax credits (Individual Income) · Credit · Environmental Support · Iowa Code 422.11I, 422.12NA Geothermal Heat Pump Tax Credit is available for individual income tax equal to 20 percent of the federal residential energy efficient property tax credit allowed for geothermal heat pumps provided in section 25D(a)(5) of the Internal Revenue Code for residential property located in Iowa.
• Enterprise Zone Housing Investment Tax Credit (Various tax types)$900K
  Tax credits · Credit · Business Incentive · Iowa Code 15.119, 15E.191, 15E.197, 15.333, 422.10(5), 422.11F(2), 422.33(5)(f), 422.33(12)(b), 533.329(e)A nonrefundable Housing Investment Tax Credit is awarded to encourage investment in Iowa’s economically distressed area. The credit is equal to ten percent of investment directly related to the building or rehabilitating of single-family homes or multiple dwelling units in an area designated as an Enterprise Zone by …
• Wind Energy Production Tax Credit (Various tax types)$800K
  Tax credits · Credit · Business Incentive · Iowa Code 476B, 422.11J, 422.33(16), 422.60(8), 423.4(4), 432.12EA nonrefundable Wind Energy Production Tax Credit is issued to electrical production facilities that produce electricity from wind. The credit is equal to $0.01 per kilowatt-hour of electricity sold or generated for on-site consumption. The facilities are approved through the Iowa Utilities Board.
• Early Childhood Development Tax Credit$700K
  Tax credits (Individual Income) · Credit · Education Support · Iowa Code 422.12CThe Early Childhood Development Tax Credit is equal to 25 percent of the first $1,000 of expenses paid for early childhood development for each dependent from the ages of three to five. The credit is refundable, meaning a claim may exceed computed tax.
• Charitable Conservation Contribution Tax Credit$600K
  Tax credits (Corporation and Individual Income) · Credit · Natural Resources Support · Iowa Code 422.11V, 422.33(25)A nonrefundable Charitable Conservation Contribution Tax Credit is available to taxpayers who make an unconditional charitable donation of a qualified real property interest located in Iowa to a qualified organization exclusively for conservation purposes.
• Ethanol Promotion Tax Credit$600K
  Tax credits (Corporation and Individual Income) · Credit · Business Incentive · Iowa Code 422.11N, 422.33A refundable Ethanol Promotion Tax Credit was available to retail dealers of ethanol blended gasoline who met the required biofuel distribution threshold. The amount of the tax credit was based on the amount of pure ethanol gallons sold. For example, 10 gallons of E10 equals one gallon of pure ethanol.
• Enterprise Zone - Investment Tax Credit (Various tax types)$500K
  Tax credits · Credit · Business Incentive · Iowa Code 422.11F(2), 422.33(12)(b)An Investment Tax Credit of up to 10 percent of the new investment in machinery and equipment, land, buildings, and improvements to existing buildings. This tax credit may be carried forward for up to seven years.
• Assistive Device Tax Credit$0
  Tax credits (Corporation Income) · Credit · Business Incentive · Iowa Code 15.119, 422.33(9)A refundable Assistive Device Tax Credit is available to taxpayers who operate a small business and purchase, rent or modify an assistive device or make workplace modifications for an individual with a disability who is employed or will be employed by the small business.
• Claim of Right Tax CreditMinimal
  Tax credits (Individual Income) · Credit · Administrative · Iowa Code 422.5(10)A refundable Claim of Right Tax Credit may be claimed when taxpayers had to repay income in the current tax year that was reported and taxed on a prior Iowa tax return. The credit equals the tax paid on that income in the prior year.
• Farm to Food Donation Tax CreditMinimal
  Tax credits (Individual Income) · Credit · Charitable Organization Support · Iowa Code 422.11R, 422.33(30)Credit is availbale to taxpayer who produces a food commodity and donates it to an Iowa Food Bank or an Iowa emergency feeding organization. The food must not be damaged and meet requirements for donated food pursuant to the Federal Emergency Food Assistance Program.
• Geothermal Tax CreditMinimal
  Tax credits (Individual Income) · Credit · Environmental Support · Iowa Code 422.10AThe tax credit equal to 10% of qualified geothermal expenditures was available for installations completed in 2017 and 2018. Expenditure estimates are based on amounts still eligible to be claimed based on carryforward provisions.
• Supplemental Research Activities Tax CreditMinimal
  Tax credits (Corporation and Individual Income) · Credit · Business Incentive · Iowa Code 15.119, 15.335, 15A.9(8), 15E.196(4), 422.10, 422.33(5)A refundable Supplemental Research Activities Tax Credit is awarded to taxpayers who have been approved by the Economic Development Authority under the Enterprise Zone Program and the High Quality Jobs Program.
• Third Party Developer Tax Credit (Various tax types)Minimal
  Tax credits · Credit · Business Incentive · Iowa Code 15.326A refundable Third Party Sales Tax Credit is available to third-party developers involved in High Quality Jobs Program projects. The developer must submit completed forms to the Economic Development Authority for approval of the credit.