TAX structure
economic development
State and Local Tax Structure
Incentive programs
Explore information related to Iowa and the Cedar Valley’s tax climate, as well as incentives for your business.
STATE CORPORATE TAX
Iowa’s Corporate Income Tax is based on a single factor non-unitary tax formula. Tax is levied only on the net income derived from sales conducted within the State of Iowa. No sales in Iowa; no state corporate income tax.
For those business entities that do have State Corporate Tax in Iowa the 2025 rate ranges from 5.5% to 7.1%. Iowa allows 50% deductibility of federal taxes from Iowa Corporate Income Tax. The intent is to achieve a flat 5.5% in the next few years.
Iowa Corporate Income Tax may be reduced through Iowa’ New Jobs Tax Credit or through The State’s High Quality Jobs Program for expanding companies.
UNEMPLOYMENT COMPENSATION CONTRIBUTION RATE
The new employer’s rate is 1.0% (lowest permitted rate by federal law) of the first $39,500 of each employee’s wage for non-construction jobs in 2025.
WORKERS COMPENSATION
In 2020, Iowa saw a 3% rate decrease for workers’ compensation.
SALES/USE TAX EXEMPTION STATE OF IOWA
Certain business products and services are exempt from sales and use tax.
- Manufacturing Machinery
- Manufacturing Inventory
- Pollution Controls
- Computers to Process Data – by insurance companies, financial institutions, or certain commercial enterprises.
- Materials in Production
NO PROPERTY TAX ON MACHINERY & EQUIPMENT
Manufacturing machinery and equipment, as well as computers, used to process data by insurance companies and financial institutions are exempt from property tax.
PROPERTY TAX
Property tax rates on land and buildings are at levels determined by each local community.
Generally, those property taxes are levied at a rate of $33-$40 per $1,000 of the assessed value with the assessment being 90% of the market value for commercial and industrial property.
Utility Franchise Fee
City of Waterloo – Supplemental Utility Franchise Fee: 4% gas & electricity
For those business entities that do have State Corporate Tax in Iowa the 2024 rate ranges from 5.5% to 7.1%. The goal for the State of Iowa is to achieve a flat 5.5% State corporate tax rate in the next several years.
Utility (Sales) Tax
Type | Percentage |
|---|---|
Telecommunications | 0% Interstate/Intrastate |
Electricity/Gas | 6% Interstate – Portion used in manufacturing exempt |
Internet Access | Exempt |
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