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of Iowa qualified expenses above a base amount, under the old Research Activities Credit. It covers tax years beginning in 2025 or earlier and was repealed effective January 1, 2026.
of eligible Iowa expenses is the most the new Iowa Economic Development Authority credit can award, for tax years beginning in 2026 or later.
IEDA can issue no more than $40 million in credits each fiscal year. If requests go over, every award is cut pro rata.
Businesses must be certified by IEDA before they can apply for the credit. The 2026 certification deadline was September 30, 2026.
Certified businesses apply by January 31 after their federal return is filed and accepted. IEDA expects to announce awards by about April 1.
Credit above your Iowa tax liability is refundable under the new program. Neither the old credit nor the new one can be transferred.
Iowa builds on the federal definition of qualified research, so work that meets the four-part test is where we start. The research has to happen in Iowa, and your business has to fall within an industry the state has approved.
Who is eligible
For the new credit, a business has to be primarily engaged in advanced manufacturing, bioscience, insurance and finance, or technology and innovation, and its research has to happen in Iowa.
Second-generation food innovation, hybrid seed technologies, food ingredients and supplements, diagnostic analytics and immunotherapies, crop protection, chip technologies and microelectronics, medical equipment and supplies, software and technology, aerospace, pharmaceuticals, and consumer products.
Businesses primarily engaged in agriculture production, agricultural cooperatives, construction, ethanol biorefining, retail, wholesale, transportation, real estate, publishing, accounting, architecture, collection, or finance or investment are not eligible.
Iowa replaced its credit in 2026. These are the rules worth knowing, whether you are claiming a 2025 credit or planning for the new program.
Iowa repealed its Research Activities Credit effective January 1, 2026, and it leaves the Iowa Code entirely on January 1, 2027. It can still be claimed for tax years beginning on or after January 1, 2025 and before January 1, 2026. From 2026 on, a different program run by the Iowa Economic Development Authority takes over.
For tax years beginning in 2026 or later, IEDA has to certify your business as a qualified business before you can apply for the credit. Certification can last up to five years, with an annual report each January 31, and both steps run through the Opportunity Iowa portal. The 2026 certification deadline was September 30, 2026.
IEDA can issue at most $40 million in credits a year. If applications add up to more than that, every award is reduced pro rata, so 3.5% is a ceiling rather than a promise. You claim the credit in the tax year after the one in which you incurred the expenses.
The old credit was limited to manufacturing, life sciences, agriscience, software engineering, and aviation and aerospace. The new one covers advanced manufacturing, bioscience, insurance and finance, and technology and innovation. It also excludes businesses with a documented pattern of legal or regulatory violations.
For the old credit, wages count only if the work was done in Iowa and most of the employee's time went to research projects. Paid computer access does not count, and supplies count at just 40% for 2025. You also have to use the same method, regular or alternative simplified, that you used on the federal return.
The old credit goes on a timely filed return, including extensions, using Form IA 128 or IA 128S with the IA 148 schedule. If you claimed it on time, an amended return cannot increase it unless you file within six months of the due date or the increase comes from an audit. Only part of any credit above your tax liability is refunded.
The Iowa credit and the federal credit are separate claims, but Iowa ties its credit to the federal one. The old credit required you to claim the federal credit, and IEDA bases the new one on expenses filed and accepted on your federal return.
That makes the federal claim the foundation. We work alongside your CPA so the federal return, the IEDA applications, and any amended 2025 claim line up.
We meet with your key staff to identify every qualifying project and disqualify any that don’t meet IRS criteria.
Our team reviews your payroll, general ledger, and tax returns to calculate the full credit.
A dedicated team with an impeccable IRS defense record reviews everything through our QA process.
You receive a complete, audit ready report that your CPA files alongside your taxes or amends for prior years.
Start with a no-obligation call to determine what your business could claim.