Forest ProductsTax Credit Sourcebook

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.

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