A right-to-work state, Iowa is one of only five states that offer corporations 50% deductibility of federal taxes from corporate income. Using the single factor formula, corporate income tax is levied only on net income derived from sales conducted with the state. In Iowa, corporate income tax can also be reduced or eliminated by the New Jobs Tax Credit or High Quality Job Creation Program. There’s also no corporate personal property tax, no sales and use tax on manufacturing machinery and equipment purchases in Iowa.
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Sales tax in Iowa is 6%, and Corridor communities each feature a Local Option Sales Tax of 1%, making for a 7% consolidated sales tax rate. Corridor communities are known for their aggressive efforts to hold down property taxes for businesses and residents alike. For example, Clear Lake’s 2014 municipal tax levy is just $10.54, one of the lowest rates for communities of more than 10,000 in the state.
High Quality Jobs Program
The High Quality Jobs program provides qualifying businesses tax credits and direct financial assistance to off-set some of the costs incurred to locate, expand or modernize an Iowa facility. To qualify for state assistance packages that include loans, forgivable loans, tax credits, exemptions and/or refunds, eligible businesses must meet certain wage threshold requirements.
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