Start a business in Iowa – Tax and Financial Incentives

The State of Iowa, Ida County, and utility partners offer an array of incentives for new Iowa business, including local and state tax and financial incentive programs. If you are wanting to start a business in Iowa or relocating a business to Iowa these programs are designed to provide a key ingredient to help the Iowa business grow and create new Iowa business opportunities for Ida County and Iowa.

Opportunity Zones

The Tax Cut and Jobs Act of 2017 established a new economic tax incentive called Opportunity Zones. The incentive is designed to encourage long-term, private investments in low-income census tracts by providing a federal tax incentive for taxpayers who reinvest unrealized capital gains into Opportunity Funds, which are then invested into opportunity zones.
Opportunity Funds are specialized tax vehicles dedicated to low-income areas and aimed at spurring investment and entrepreneurialism. Ultimately, that will result in business creation and economic prosperity in areas called Opportunity Zones. The zones must be comprised of Low-Income Community Census Tracts (LIC), designated by governors in every state and territory. Census tracts with a poverty rate of 20 percent or greater and/or family income less than 80 percent of the area’s median income are eligible for consideration.
In Iowa, 25 percent of the state’s LIC’s are eligible to be nominated to the U.S. Department of the Treasury for Opportunity Zone designation. Once designated, tracts remain in place for 10 years.

Interactive Map Of Opportunity Zones

The Economic Innovation Group created an interactive map of the 8,700 Qualified Opportunity Zones throughout the country. The map shown represents Ida County’s Qualified Opportunity Zone which encompasses the City of Ida Grove and into a portion of unincorporated Ida County.

View Map

Ida County Opportunity Zone Investment

Interested in learning more about investment opportunities located in Ida County? You can learn about these sites with great potential! Have questions? Reach out to Ida County Economic Development Corporation. Please contact Rita Frahm at 712-371-9438 to learn more.

External Links:

Accounting Today Article
Additional Regulatory Guidance
Council of Development Finance Agencies Overview
IEDA Announcement News Release
IRS Release announcing proposed regulation and additional guidance
NCSHA list of Opportunity Zone Funds Available
Frequently asked questions- from the Internal Revenue Service

Tax and Financial Incentives for New Iowa Business

Ida County Tax and Financial Assistance Programs

Ida County Revolving Loan
Ida County Economic Development has revolving loan funds to assist with start up and expansion of businesses within the county. The intent of these funds is to provide gap financing assistance. Loan applications can received upon request or picked up from a board member. Please contact Rita Frahm at 712-371-9438 if you have any questions or would like to receive an application. USDA is an equal opportunity provider, employer and lender.

Tax Increment Financing
If your business is located in one of the designated urban renewal areas or tax increment financing areas, it may be eligible for public improvement financing that uses the incremental taxes that the project will generate.

Enterprise Zone Exemption
Within industrial properties, the county has the authority to abate from property taxation, the actual value added by new construction to the property, under a ten year sliding scale.

Utility Incentives for New Iowa Business

Utility Partners Financial Assistance Programs

Mid American Energy
The utility company provides financial assistance to start up and expanding businesses in its service area.

North West REC
North West REC operates a $2.5 million Revolving Loan Fund to supplement the financing of eligible development projects.

Western Iowa Tax and Financial Assistance Programs

Siouxland Economic Development Corporation (SEDC)
SEDC is a nonprofit corporation governed by a volunteer board of directors and staffed by seasoned loan professionals. In fiscal year 2003-2004, we were involved in closing small business projects totaling more than $33.6 million. These businesses created or retained 360 jobs in the Siouxland area and continue to add dollars to the tax bases of tri-state area communities.

Iowa Business Tax Advantages and Tax Credits

No corporate income tax on profits from sales outside of Iowa
Fifty percent deductibility of Federal Taxes from Iowa Corporate Income Tax
New jobs tax credit
No property tax on newly purchased manufacturing machinery, equipment and computers used in processing
No sales or use tax on manufacturing machinery, equipment and computers used in processing
No personal property (inventory) tax
Research and Development Tax Credit

State Of Iowa Financial Assistance Programs

High Quality Job Creation Program (HQJP)
This program is designed to promote the creation of quality jobs by assisting businesses locating, expanding or modernizing their facilities in Iowa through a package of tax credits, exemptions, and/or refunds to approved businesses.

Community Economic Betterment Account (CEBA)
The CEBA program provides financial assistance to companies that create new employment opportunities and/or retain existing jobs, and make new capital investment in Iowa. The amount of funding is based, in part, on the number of jobs to be created/retained. Funds are provided in the form of loans and forgivable loans.

Economic Development Set-Aside Program (EDSA)
The EDSA program provides financial assistance to companies that create new employment opportunities and/or retain existing jobs, and make new capital investment in Iowa. The amount of funding is based, in part, on the number of jobs to be created/retained. Funds are provided in the form of loans and forgivable loans. At least 51 percent of the created/retained employment opportunities must be made available to individuals presently earning wages defined as low-and-moderate income.

Value-Added Products and Processes Financial Assistance Program (VAAPFAP)
The Value-Added Agricultural Products and Processes Financial Assistance Program seeks to increase the innovative utilization of Iowa’s agricultural commodities. It accomplishes this by investing in the development of new agri-products and new processing technologies. Financial assistance is provided in the form of loans and forgivable loans.

New Jobs and Income Program (NJIP)
The Iowa New Jobs and Income Program provides a package of tax credits and exemptions to businesses making a capital investment of at least $11.4 million and creating 50 or more jobs meeting wage and benefit targets. Qualifying businesses participating in NJIP receive substantial benefits.

Iowa Industrial New Jobs Training Program (260E)
The Iowa Industrial New Jobs Training Program provides customized classroom instruction, on-the-job training and other training activities for employees in newly created jobs. An employer may be reimbursed up to 50 percent of new employees’ wages for on-the-job training. All training is customized to the company’s special needs. Community colleges finance the program by the sale of tax-exempt bonds which are repaid by the tax revenue generated by the salaries and capital invested to support the new jobs. As a result company profits are not used to repay the bonds.

For more information on State of Iowa Entrepreneurial/Small Business Development Programs, visit the Iowa Department of Economic Development online.

State of Iowa Entrepreneurial/Small Business Development Financial Assistance Programs

Venture Project Component of the Community Economic Betterment Account (CEBA)
The Venture Project Component of CEBA makes equity-like investments of up to $250,000 to start-up and early-stage businesses.

Entrepreneurial Ventures Assistance (EVA)
The Entrepreneurial Ventures Assistance (EVA) program provides financial and technical assistance to early-stage technology companies. An eligible business must be located in Iowa and in an industry sector offering the greatest start-up and growth potential for the state, including but not limited to: biotechnology, recyclable materials, software development and computer related products, advanced materials, advanced manufacturing, and medical and surgical instruments. To qualify, applicants must have completed or must be participating in entrepreneurial training from a John Pappajohn Entrepreneurial Center, or have comparable training and/or experience. Businesses engaged in retail sales, the provision of health care or professional services, and distributors of products or services are not eligible for EVA funds. Financial assistance of up to $50,000 may be awarded for the purchase of machinery and equipment, and other business acceleration expenses.

Targeted Small Business Financial Assistance Program (TSBFAP)
The TSB Financial Assistance Program is designed to assist in the creation and expansion of Iowa small businesses that have an annual gross sales under $3 million and are at least 51 percent owned, operated and managed by women, minorities or persons with a disability.

Self-Employment Loan Program (SELP)
This program is designed to assist in the creation and expansion of businesses owned, operated and managed by women, minorities, or persons with a disability. To qualify for a SELP loan, applicants must have an annualized family income that does not exceed current income guidelines for the program.

Entrepreneurs With Disabilities (EWD)
The EWDI program helps qualified individuals with disabilities establish, acquire, maintain or expand a small business by providing technical and financial assistance. To be eligible for the program, applicants must be active clients of the Iowa Department of Education Division of Vocational Rehabilitation Services or the Iowa Department for the Blind.