Businesses are invited to invest in Iowa by Iowa Legislators. The Major Economic Growth Attraction program (MEGA program) passed yesterday (4/16) with a vote of 47 yeas and 0 nays . The program offers tax incentives for businesses making capital investments and creating jobs in Iowa. Qualified businesses may receive a tax credit for withholding tax, a refundable investment tax credit, and refunds of services tax and sales and use taxes paid for building and construction materials.
To qualify, a business must invest $1 billion in acquiring Iowa land and build a facility focused on manufacturing, biosciences, or research. In addition, the business must also create jobs, pay wages at 140% of labor-shed rates, and provide employees with qualified benefits.
When drafting the MEGA program, Iowa legislators provided protections to Iowa businesses. The Iowa Economic Development Authority (IEDA) is directed to evaluate how the new facility will impact existing Iowa businesses. In considering whether or not to award tax incentives to a new facility, the IEDA measures the potential for employee displacement at a current Iowa competitor along with the number of jobs created. Program terms also prohibit the award of tax incentives to any foreign business from a country adversarial to the United States.
Businesses looking to build facilities in Iowa may receive both tax incentives and save the cost of location research by combining the MEGA program with the “Iowa Certified Site” program. IEDA’s certified site program is designed to save investors time and money by identifying “development ready” sites and providing the documents and site data. As a result, qualified business who build on a certified site will spend less on research and due diligence while also receiving tax incentives from Iowa’s MEGA program.
If you have questions surrounding the MEGA program or any tax-related matters, please reach out to Rebekah Jalilian-Nosraty or one of our other Taxation Attorneys.
This article was written for general informational purposes and summarizes tax laws. As such, it should not be relied upon for compliance with the Internal Revenue Code or state tax laws.
