Iowa · research and development · IA-RAC-001
Iowa Research and Development Tax Credit (2026 program)
Publication revised September 24, 2026. Sourcebook page 112.
Credit amount / calculation
2026 program: up to 3.5% of eligible Iowa research expenditures, subject to the agreement and statewide proration.
Business fit and eligible activity
Manufacturers claiming the federal research credit can obtain an Iowa refundable credit. Qualified research activity. Ordinary production, routine quality control and an equipment purchase alone do not qualify.
Eligibility and practical use
The new program requires industry/sector certification, a contract, annual applications and accountant verification. Ordinary manufacturing status is not sufficient. Do not use the prior 6.5% or 4.55% research formulas for this new program.
Illustrative business benefit
A certified wood-products innovator with $1 million of accepted Iowa research expenditures and an agreed 3.5% rate has an unadjusted credit of $35,000. Proration can lower the award. The excess over income tax is refundable.
Timing / first action
Check application or certification requirements before incurring the qualifying expense or beginning the qualifying activity. Certification window: February 2-September 30; annual credit application due January 31 under the program timeline. Confirm which federal-return filing year controls. Obtain qualified-business certification and confirm the applicable tax-year and federal-return timeline.
Official sources
- opportunityiowa.gov — Program Overview (opportunityiowa.gov)
Related programs
Historic Preservation Tax Credit
Percentage of qualified rehabilitation expenditures under
Certified historic mills and industrial buildings can qualify for an allocated rehabilitation credit.
Clean Electricity Investment Credit (Internal Revenue Code §48E)
Generally
Potentially relevant when a forest-products facility owns qualifying zero-emission generation or energy-storage property.
Credit for Increasing Research Activities (Internal Revenue Code §41)
Regular research-credit method
A sawmill, secondary manufacturer or biomass business can qualify when it performs genuine technological experimentation to improve a product or process.
Rehabilitation Credit (Internal Revenue Code §47)
Generally
A forest-products company rehabilitating a certified historic mill or industrial building for income-producing use may qualify.