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About the State of Iowa
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Iowa as an ideal state for Business
Example of Support for New Jobs Training Programs
Iowa Department of Economic Development
Home > About State of Iowa > Iowa as an ideal state for Business
About the State of Iowa
Iowa as an ideal state for Business
What drives companies to come to Iowa? There are numerous reasons - thriving economy, good schools, highly-educated work force, low living costs, low office rent, low crime rate, a wide range of job training system, preferential taxation, and high-quality life - you’ll find each and every one in Iowa. This package comprises information essential at the crucial stage of selecting a business location. When you need more detailed information with regard to particular areas in Iowa, the IDED is ready to provide you with extensive information to meet your company’s needs including information on the availability of the office spaces.
Low Operational Costs
Business activities costs in Iowa are ranked the 2nd lowest in the country, according to the Cost of Doing Business Index issued by Milken Institute. This indicates the business costs in each state compared with the national average value.
America’s Best Work Force
The defining characteristics of the work force in Iowa lie in its high level of education and productivity. The rate of high school graduates in Iowa is 88% (the national average is 84%), Regarding the American College Test (ACT) and Scholastic Assessment Test (SAT), which are the standardized college entrance exams, students in Iowa consistently rank higher than those in other states in the nation. Coupled with the job training system and good educational institutions in Iowa, which contribute to cost reduction, the state’s work force offers considerable benefits when establishing business within the state. The State of Iowa provides assistance to operations for employment, such as selection, evaluation and examination of new employees. Additionally, the special redemption system for job training enables companies to save time/expenses used for training newly hired employees.
Access to Markets
Iowa is surrounded by eight states. In this region, there is a large-scale market with 912,000 companies, a population of 35.3 million people and individual gross income of $902 billion dollars - and Iowa lies in the center of this area. In addition, Interstate Highways 35 and 80, which are the expressways with the greatest volume of traffic in the U.S., cross at the central part of the state. Interstate Highway 380 connects Iowa City and Cedar Rapids with Waterloo, and 29 directly leads to Kansas City and South and North Dakota. Further, the air and railroad networks in Iowa are well developed, connected with all the major markets. The Mississippi River and the Missouri River, which serve as the shipping routes to the Gulf of Mexico, lie along the state line on the east and west sides of the State of Iowa respectively.
Corporate Income Tax
The corporate income tax system in Iowa has some major advantages compared with systems in other states.
The corporate income tax system in Iowa has some major advantages compared with systems in other states.
The single-factor, non-unitary tax system is employed. In Iowa, corporate tax is calculated only for the profits gained from sales within the state. For example, if a manufacturer in Iowa sells all of its products outside of Iowa, it is not required to pay Iowa corporate income tax.
Iowa corporate income tax is remitted based on the New Employment Tax Deduction system.
New Jobs Tax Credit
Employee Training
The job training program in Iowa provides a wide variety of job training operations required for new employees. In particular, this program is optimal for companies that are engaged in manufacturing, component assembly, research and development, or service sectors covering other states as well to create new jobs.
Activities Subject to Financial Assistance Based on Iowa’s New Jobs Training Program
Selection, capability assessment and examination
Business traveling expenses for new employees’ training -Traveling to any location worldwide will be covered.
Provision of salary for lecturers at in-house training (100%)
Expenses for training facilities, equipment, information and materials (100%)
Employee wages and benefits paid during the trainning program (up to 50%)
Local community colleges provide finances for this training program by issuing tax-free bonds using tax revenue generated from wages and investment that are created by new employment as resources. As a result, profits of companies are not used for redemption of bonds.
Regulatory Assistance
The Regulatory Assistance Program is an administrative service that provides advice and support to companies when submitting application forms to the Iowa Department of Natural Resources (IDNR) and other regulatory authorities. The purpose of this program is to facilitate communication between companies and regulatory authorities and help companies to promptly obtain a license.
Enterprise Zone Benefits
Business enterprises that invest $500,000 and more in the specific business district and create over ten kinds of jobs are eligible for the exemption of all of or part of tax property and certain state tax credits and tax refunds. Counties and cities can establish “business districts” in regions that have financial difficulties in supporting the attraction of enterprises.
Financial Assistance Program
Iowa Department of Economic Development has a number of financial support programs with the goal of supporting business expansion. Enterprises can receive subsidies from the Community Economic Betterment Account (CEBA) and the Economic Development Set-Aside (EDSA) after job development, pay level, competitiveness against other firms in Iowa, impact on the local economy and other factors are comprehensively assessed. Local administrative agencies take care of applications on behalf of companies. Funds are provided in the form of debt-release finance, low-interest or no-interest finance, capital-safe or interest-guaranteed finance. The Revitalize Iowa’s Sound Economy Program (RISE) of the Iowa Department of Transportation can be used for the development of railroad or roads.
High-quality Job Creation Program
This program was designed for companies that have production facilities in Iowa and intend to increase or modernize them to promote employment of highly proficient workers. In order to be eligible for this program, the concerned company must meet standards regarding targeted industry, employee benefits and facility construction specifications. Under this program, authorized companies are qualified for deductions, tax reduction or exemptions, and tax refund.
Sales Tax/Usage Tax for Manufacturing Machinery/Equipment to be Exempted
Assets such as machinery used in manufacturing companies, as well as computers purchased for data processing in insurance companies, financial institutions and other businesses are subject to exemption from sales and usage taxes of the State of Iowa. Sales tax is not imposed when purchasing electricity or natural gas directly used for manufacturing.
Property Tax for New Industry Machinery and Equipment to be Exempted
Of machinery and equipment used for manufacturing and computer that insurance companies and financial institutions use for data processing, those that were established and recorded on and after January 1, 1995 are subject to exemption from property tax.
Local Tax Abatement
The Iowa State Law encourages cities and counties to reduce the amount of local tax for fixed property put on the increased portion of real estate value resulting from conversion into industrial use. The following indicates the maximum tax deduction for the increased portion of the market price due to newly built or added facilities.
1st fiscal year 2nd fiscal year 3rd fiscal year 4th fiscal year 5th fiscal year
75% 60% 45% 30% 15%
Non-taxable Personal Assets and Business Inventory
Personal assets are exempted from taxation. In Iowa, business inventory of products, raw and processed materials, and products in processing are regarded as personal assets and thus tax free.
Unemployment Insurance
The unemployment insurance rate for new business entities in Iowa is one of the lowest in the U.S.
The insurance rate in the first three years across all industries except for construction is 1%. The insurance rate after that will be determined in accordance with actual performance. An unemployment insurance rate of 0% is feasible in the case of companies with positive achievements in Iowa and currently this premium rate of 0% is applied to 43% of the employers in Iowa.
Workers’ Compensation
With regard to expenses for occupational injury insurance, Iowa is counted among the 13th states in the U.S. with the lowest costs. The expense for workers’ compensation of companies engaged in manufacturing in Iowa at present is 30% lower that the national average.
Lease Payments for Industrial Premises
Lease payments for industrial premises in Iowa are relatively cheap compared to other large metropolitan areas.
Net Lease Rates for 40,000-59,999 sq. ft. Industrial Facility
Source: SIOR's (Society of Industrial and Office Realtors)
2005 Comparative Statistics of Industrial and Office Real Estate Markets
Electric Rates for Industrial Use
Electric power for industrial use is provided stably at low cost. (See Investment Environment.)
Other Important Factors
Elements other than income and expenditure accounts sometimes exercise major influences over corporate business. Other merits of Iowa include a relaxed lifestyle, a relatively low crime rate and short commuting time. Due to well-developed roads and rare traffic jams, the average time for commuting is 18.2 minutes, attracting employees from a wide-ranging area. These factors contribute to the formation of a pleasant and high-quality living environment in Iowa. In fact, in the Annual Review of States that Morgan Quitno Publishing releases every year, Iowa recently came in 6th of the Most Livable States in the U.S.