Iowa is a great place to do business. In a recent study, the Milken Institute named Iowa 2nd in the nation for the lowest average business costs. In addition to low business costs, Iowa features the following:

Iowa's single-factor, non-unitary tax is based only on the percentage of total sales income within the state. An Iowa manufacturer selling all its products outside Iowa would pay no Iowa corporate income tax. Iowa allows 50 percent deductibility of federal taxes from Iowa corporate income tax. Iowa corporate income tax may be reduced or eliminated by the New Jobs Tax Credit and Research and Development Tax Credit.

Businesses entering into an agreement under the state's training program, and which increase their workforce by at least 10 percent, may qualify for this credit to its Iowa corporate income tax. This credit is equal to 6 percent of the state unemployment insurance taxable wage base. The credit for 2008 is $1,368 per new employee. The tax credit can be carried forward up to 10 years.

A credit for increasing research activities is 6.5 percent of the company's apportioned share of qualifying research expenditures in Iowa. A company must meet the qualifications of the federal research activities credit in order to be eligible for the credit on the Iowa return.

The purchase of industrial machinery and computers assessed as real property and used for manufacturing or used to process data by insurance companies, financial institutions, or certain commercial enterprises, is exempt from Iowa sales or use tax. In addition, there is no sales tax on materials used in the manufacturing process or for purchases of electricity or natural gas used directly in the manufacturing process.

No Property Tax on New Industrial Machinery and Equipment: Manufacturing, machinery, equipment, and computers are exempt from property tax.

Pollution Control or Recycling Property Tax Exemption:

Pollution control and recycling equipment may be eligible for a property tax exemption. Improvements to real property that are primarily used to control pollution of air or water, or primarily used for recycling, may qualify. An application must be filed for exemption.

City councils or county boards of supervisors may use the property taxes resulting from the increase in taxable valuation due to construction of new industrial or commercial facilities to provide economic development incentives to a business or industry. Tax Increment Financing may be used to pay the cost of public improvements and utilities which will serve the new private development, to finance direct grants or loans to a company, or to provide the local match for federal or state economic development assistance programs.

Personal property is not assessed for tax purposes. In Iowa, personal property includes corporate inventories of salable goods, raw materials and goods in process.

Iowa's workers' compensation costs are the ninth lowest rates in the nation. The average cost of workers' compensation insurance for manufacturers in Iowa is currently 25 percent lower than the U.S. average.

Iowa has one of the lowest new employer unemployment insurance rates in the nation. The rate for all new non-construction businesses is 1%.

The Regulatory Assistance Program enhances the range of services available to Iowa companies by advising and assisting companies in the preparation and submission of permit applications with the Iowa Department of Natural Resources (IDNR) and other Iowa regulatory agencies. The mission of the Regulatory Assistance Program is to facilitate communication between the business and regulators, and to expedite the permitting process.

The Iowa Department of Economic Development also has personnel available to assist your small business with Air Quality Regulations. Iowa DED understands how overwhelming some regulations may be to small businesses. A liaison is available to work exclusively with small businesses to answer questions regarding air quality regulations for your small business.