BUSINESS CLIMATE

Iowa Business Taxes

Iowa’s tax structure rewards investment, reduces overhead, and accelerates profitability.

Corporate Income Tax: Pay Only on What you Sell in Iowa

Iowa uses a single-factor, nonunitary corporate income tax, based solely on in-state sales. No sales in Iowa? No Iowa corporate income tax. This is a powerful incentive for manufacturers and exporters.

Tax Exemptions That Lower Operating Costs

Iowa offers numerous tax exemptions that significantly reduce operational expenses:

• No sales or use tax on industrial machinery, equipment, and computers used for manufacturing.
• No sales tax on purchases of electricity or natural gas used in the manufacturing process.
• No sales or use tax on computers and peripherals used in the processing or storage of data.
• No property tax on manufacturing machinery, equipment, and computers.
• No tax assessment on personal property including corporate inventories of salable goods, raw materials, and goods in process.
• No sales tax on materials used in the manufacturing process.

Unemployment Insurance: Low Entry Costs

The 2025 standard new employer rate for all non-construction businesses for a three-year period is 1.0 percent on a $39,500 wage base.

Worker’s Compensation: Among the Nation’s Lowest

Iowa’s worker’s compensation costs are 16% below the national average. Under Iowa law, employers retain the right to choose medical providers for workplace injuries.