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Iowa's Business Incentives - 3
 IOWA CORPORATE INCOME TAX
A number of features of Iowa's corporate income tax offer significant advantages when compared to other states' corporate taxes.1. 50 percent deductibility of federal taxes from Iowa corporate income tax.2.
Single-factor, non-unitary tax. Iowa's tax is based only on the percentage of total sales income within the state. An Iowa manufacturer selling all of its products outside Iowa would pay no Iowa corporate income tax.3. Iowa corporate income tax may be reduced or eliminated by the New Jobs Tax
Credit.
NEW JOBS TAX CREDIT
Businesses entering into an agreement under the state's training program and increasing their work force by at least 10 percent may qualify for this credit to their Iowa corporate income tax. Their credit is equal to six percent of the state unemployment insurance taxable wage base. The credit for
2002 is $1116 per new employee. The tax credit can be carried forward up to 10
years.
EMPLOYEE TRAINING
Iowa's unique job training programs can provide any training from services required by a business for new employees. Companies creating new jobs in manufacturing, assembling products, conducting research and development, or providing interstate services are
eligible.
THE IOWA NEW JOBS TRAINING PROGRAM PROVIDES FUNDS FOR:
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Screening, skills assessment and testing
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Travel for new employees for training, anywhere in the world
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On-the-job training reimbursement up to 50 percent of the new employees' wages and fringe benefits during the training period
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In-plant instruction by company instructors
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Costs of training facilities, equipment, materials and supplies
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NEW JOBS TRAINING ASSISTANCE EXAMPLE |
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ASSUMPTION - 57 new employees at $9.76 per hour
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JOB TRAINING ASSISTANCE
(Based on the diversion of a portion of the withholding tax from the new
jobs)
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$110,000 |
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JOB TRAINING ASSISTANCE USE EXAMPLE
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On-the-job training
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$36,000
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Company trainer for quality improvement training
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$18,800
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Travel for new employees to training
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$23,200
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College trainer for safety training
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$16,500
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Training materials and equipment
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$15,500
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ESTIMATED NEW JOB TAX CREDIT
*Companies utilizing the New Jobs Training Program and increasing their employment by at least 10% may be eligible for this credit, which is applied to Iowa Corporate Income Tax
* Based upon the 1999 credit of $990 per new job and the above assumption of 57 new
jobs
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$56,430 |
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TOTAL ESTIMATED JOB TRAINING ASSISTANCE & NEW JOB TAX CREDIT
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$166,430 |
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Iowa's 15 community colleges finance the program by the sale of tax-exempt bonds that are repaid by the tax revenue generated by the salaries and capital invested to support the new jobs. As a result, company profits are not used to repay the bonds.
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