Corporate Income Tax
A number of features of Iowa’s corporate income tax offer significant
advantages when compared to other states’ corporate taxes.
- 50 percent deductibility of federal taxes from Iowa corporate income
tax.
- Single-factor, non-unitary tax. Iowa’s tax is based only on the
percentage of total sales income within the state.
- Businesses entering into an agreement under the state’s training
program and which increase their work force by at least 10 percent, qualify
for the New Jobs Tax Credit to their Iowa corporate income tax. The credit
is equal to six percent of the state unemployment insurance taxable wage
base.
New Jobs and Income Program
The Iowa New Jobs and Income Program provides a package of tax credits
and exemptions to businesses making capital investment of at least $10
million and creating 50 or more jobs meeting wage and benefit targets.
Sales Tax
Iowa’s 5 percent sales tax is imposed on transactions involving the
transfer, exchange or barter of tangible personal property for a consideration.
Iowa also imposes a sales tax on certain enumerated services and the gross
receipts from the sale of most optional service or warrant contracts.
The City of Council Bluffs imposes a 1 percent local option sales
tax that is directed towards the City’s infrastructure.
Use Tax
Sales and Use Tax Exemptions
The purchase of industrial machinery and computers assessed as real
property and used for manufacturing or used to process data by insurance
companies, financial institutions or certain commercial enterprises is
exempt from Iowa sales or use tax. No sales tax is due on purchases of
electricity or natural gas used directly in the manufacturing process.
Machinery and Equipment Tax
Industrial machinery and equipment are exempt from property taxation.
As well as computers used to process data by insurance companies and financial
institutions installed and first assessed on or after January 1, 1995.
Pollution control equipment is eligible for exemption from property tax.
Personal Property (Inventory) Tax
Personal property is not assessed for tax purposes. In Iowa, Personal
property includes corporate inventories of salable goods, raw materials
and goods-in-process.
Personal Income Tax
Iowa residents with net incomes of more than $9,000 for singles or
$13,500 for married tax payers or heads of households are required to file
Iowa returns and are subject to Iowa income tax. Federal income tax are
100% deductible from state income tax.
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