Qualifying Business Tax Credits
Investments in Qualifying Businesses tax credits, along with the Community-Based Seed Capital Funds tax credits, were created to enhance the quality of life for Iowa citizens by increasing the availability and accessibility of venture capital, particularly for ventures at the seed capital investment stage, which can encourage the creation of wealth through higher-paid, new jobs while at the same time promoting industrial development and innovation. This program is designed to encourage venture capital investment at the seed capital stage. The total amount of tax credits available to be issued for investments in Qualifying Businesses and Community-Based Seed Capital Funds (Angel Investor Tax Credits) is $2 million per fiscal year.
Investors can receive tax credits equal to 20 percent of the investor’s equity investment in a Qualifying Businesses. Investors must invest cash to purchase equity or near-equity in a Qualifying Business.
Tax credits are awarded on a first-come, first-serve basis. The maximum amount of a tax credit per investment by an investor in any one Qualifying Business is $50,000. The maximum amount of tax credits per investor equals $250,000 (5 investments in separate Qualifying Businesses x $50,000 per investment).
Tax credit certificates are eligible for redemption three years after the investment in a Qualifying Business.
To qualify, they must meet the following prerequisites:
IOWA Tax Credits
The Iowa New Jobs Tax Credit is an Iowa corporate income tax credit available to companies that enter into a New Jobs Training Agreement and expands their Iowa employment base by ten percent or more.
The amount of this one-time tax credit will depend upon the wages a company pays and the year in which the tax credit is first claimed. The maximum tax credit in 2014 was be $1,608 per new employee. Unused tax credits may be carried forward up to ten years.
In addition to the income tax credits, Iowa offers grants for customized training through their technical colleges as well.
Other Tax Incentives
Iowa also offers tax incentives for research and development and innovative projects. We are happy to expand on the criteria of theses benefits at a client's request.
Angel Investor Tax Credits
Angel Investor tax credits are offered to increase the availability and accessibility of venture capital, particularly for ventures at the seed capital investment stage. The previous program, the Qualifying Business tax credit, and the Community-Based Seed Capital Fund tax credits work together to encourage the creation of wealth through high-paid, new jobs while promoting industrial development and innovation. The total amount of tax credits available per fiscal year is $2 million.
Investors can receive up to 20 percent of the equity investment in either a designated Qualifying Business or Community-Based Seed Capital Fund if investing in a Qualifying Business as outlined below:
If investing in a Community-Based Seed Capital Fund the following are required:
Investors must submit an application by March 31 of the year following the calendar year in which the investor made the equity investment in either scenario.
High Quality Jobs Program/Credits
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 this very flexible assistance package that includes loans, forgivable loans, tax credits, exemptions and/ or refunds, eligible businesses must meet certain wage threshold requirements. Visit wage requirements to view the requirements for wage thresholds.
To be eligible the following criteria must be met:
Tax incentives available are as follows: