All Roll Calls
Yes: 157 • No: 62
IowaSF 65791st General Assembly (2025–2026)SenateWALLET
A bill for an act related to state taxation and finance and other related matters, by creating, modifying, and eliminating tax credits and tax incentive programs, providing for penalties, and including effective date and retroactive applicability provisions. (Formerly SSB 1205.) Effective date: 06/06/2025, 07/01/2025, 12/31/2025, 01/01/2026. Applicability date: 01/01/2017, 01/01/2025, 01/01/2026.
Sponsored By: COMMITTEE ON WAYS AND MEANS
Signed by Governor
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Bill Overview
Analyzed Economic Effects
18 provisions identified: 8 benefits, 3 costs, 7 mixed.
New credit for investing in Iowa startups
Beginning with tax years starting January 1, 2025, you can get a state tax credit for a cash equity investment in a certified Iowa business. The credit is 20% if the business is in an urban area and 35% if in a rural area. It applies only to cash paid to buy equity, and affiliates or principals cannot claim it. A person or entity can receive up to $100,000 in credits per year, and each business can receive up to $500,000 per year. The business must be certified by the economic development authority. Credits are limited by the annual pool, are not transferable, and the state publishes the names of qualifying businesses and investors and total credits issued.
Employer credits for child care and access
For tax years that start in 2025 but before 2026, employers can claim a state child care credit equal to the Iowa share of the federal section 45F credit. Employers also get 50% of the first $5,000 spent per tax year on assistive devices or workplace changes for an employee with a disability (max credit $2,500). If that assistive device credit is bigger than the tax bill, part is refunded: 85% in 2025, 80% in 2026, and 75% for 2027 and later. The assistive device credit applies to tax years starting on or after January 1, 2025 and is repealed January 1, 2031. The child care credit is tied to the federal rules, applies only to that 2025 start‑year window, and its provisions are repealed January 1, 2031.
BIG projects: new credits and tax refunds
To get BIG incentives, a project must be approved by the local community and be in sectors like advanced manufacturing, bioscience, finance, or tech. Data centers, retail, and moves within Iowa that do not add jobs are excluded, and the business must offer comprehensive benefits to full‑time workers. The state grants a qualifying investment credit after a project or portion is placed in service; it is spread equally over five tax years and can be refunded or carried forward one year. If the property stops qualifying within five years, part of the credit is recaptured. BIG certificate holders can also get a negotiated refund of sales and use taxes paid on utilities and most tangible property used to build or equip the facility, excluding furniture and intangibles. Contractors must attest to taxable sales, and refund claims may be filed quarterly, with the final claim due within one year after project completion.
Credit for making sustainable jet fuel
If you produce qualifying sustainable aviation fuel in Iowa, you get $0.25 per gallon as a refundable credit. Each business can get up to $1,000,000 per year and no more than five certificates a year. The credit applies to fuel made in calendar years 2026 through 2035. Credits are not issued before July 1, 2026 and not claimed before September 1, 2026. The program ends January 1, 2037.
Caps and set-asides for business credits
The state caps the total business tax credits it can award each year. The authority can go up to 20% over the cap in a year, but that reduces next year’s pool. Credits declined or revoked by June 30 can be reallocated the same year and do not count toward the 20% extra. Key set‑asides and limits include: $68 million per year for High Quality Jobs; $50 million per year for BIG starting July 1, 2026; a one‑time $50 million split—awards made before January 1, 2026 go to High Quality Jobs, and awards on or after that date go to BIG (this split rule ends July 1, 2026). The authority sets aside $40 million for research and development, and $10 million total each year split between renewable chemical and sustainable aviation fuel credits. Renewable chemical credits are limited to $5 million per fiscal year through fiscal years beginning before July 1, 2037 (allocation paragraph repealed July 1, 2039). The authority also sets aside $2 million for qualifying business investment credits unless demand is lower. An annual allocation is also made for innovation fund and seed investor credits, with a temporary reduction tied to credits authorized before July 1, 2026 and that reduction rule repeals July 1, 2026.
Limits and reawards for brownfield credits
The redevelopment (brownfields and grayfields) tax credit program is capped at $15 million per year, and the board cannot award more than $15 million in a fiscal year. If an investor revokes or timely declines credits by June 30 of the next fiscal year, those credits can be re‑awarded in the next application period. Re‑awarded credits do not count against the $15 million annual limit.
New R&D credit; old credit ends
For tax years beginning on or after January 1, 2026, certified businesses can get a refundable credit up to 3.5% of in‑state qualified research expenses. Apply by January 31 with CPA verification; the authority may prorate awards each year. For state tax years beginning in 2026, supplies no longer count as qualified research expenses. On January 1, 2027, the old research activities credit is repealed. Recipients must report R&D spending, the Iowa portion, jobs, and wages each year, and the state publishes recipient names and credit amounts.
Existing High Quality Jobs deals stay valid
High Quality Jobs agreements signed on or before December 31, 2025 remain in force under their terms. Money moved to the authority for these purposes is available for economic development uses and does not revert at year‑end; it stays available through the next fiscal year.
Farm research can qualify for R&D credit
Farmers doing approved agriscience research in Iowa can qualify for the research tax credit. The work must be in applied animal science, overseen by a board with an accredited researcher and a veterinarian or doctoral‑level scientist. Results must be checked using statistics and made public when reliable. This rule applies retroactively to tax years beginning on or after January 1, 2017.
Iowa film incentives for 2025–2027 spending
The state creates a film incentive program and fund. Eligible spending must occur on or after July 1, 2025 and before July 1, 2027. Only qualified productions with approved ratings and qualified Iowa production facilities can receive incentives. The law defines which productions and facilities qualify, and sets the time window for eligible costs.
E-15 fuel tax set at 30¢ in 2030
Starting July 1, 2030, the excise tax on E‑15 and higher ethanol gasoline is $0.30 per gallon. Before that date, the rate is set each year based on the share of E‑15+ gallons distributed in the prior period. The Department of Revenue can correct the distribution percentage before June 1 to fix errors or late reports.
Older investor and donor credits shift
For Endow Iowa, the law caps total credits at $3.5 million per year and limits each taxpayer to $150,000, starting with tax years beginning on or after January 1, 2026. Fund names cannot include company names, and foundations must report grants by January 31 each year. Several seed‑investor code sections are repealed, and you cannot claim a venture credit if you already claimed one for the same investment or if you manage the Iowa fund of funds. Seed credit certificates are issued on a first‑come, first‑served basis. Credits issued before December 31, 2025 or before July 1, 2026 stay valid and can still be claimed, including carryforwards. The community‑based seed capital fund must secure and invest at least $3,000,000.
Mega‑project sales tax refunds paid slowly
For mega‑projects, contractors must swear to taxable sales before the job ends. The business must tell the revenue department when the project is done and may apply for refunds no more than quarterly and within one year. The state audits claims. If approved, refunds are paid in five equal parts over five tax years after the audit. No interest is added while you wait.
Workforce housing credits: caps and priorities
Workforce housing tax credits face yearly caps: $39.5 million (year starting July 1, 2025), $36.5 million (starting July 1, 2026), and $35 million each year starting July 1, 2027. One project can get at most $1,000,000. Half of each year’s limit is set aside for small‑city projects, and unused set‑aside can be reassigned. For years with a $35 million limit, at least $17.5 million is reserved for small‑city projects registered on or after July 1, 2017. The authority can also award extra points to projects in communities that have gone three application periods without an award, or where a recent or planned business expansion got incentives.
New funds to run growth programs
The state creates treasury funds controlled by the economic development authority. Money in these funds, and interest earned, stays with the authority for program use. The funds are not subject to the normal year‑end reversion rule.
Tougher clawbacks after layoffs or broken deals
Businesses that get state incentives must sign an agreement and certify each year they are meeting job and project promises. If they fall short, the state can cut or end the award and require payback, and counties can recover any exempted property taxes. Layoffs, a mass‑layoff notice, or a closure can trigger reductions, penalties, or repayment. The board may extend completion dates for good cause, but it cannot raise the approved maximum. Businesses must keep a base employment level and need board approval to assign the deal.
High Quality Jobs program ends 12/31/25
The High Quality Jobs program is repealed on December 31, 2025. After that date, this program is no longer available in state law.
New business incentive caps and tax breaks
Apply on the authority’s form and pay a fee; high‑water‑use projects must file a water‑saving plan. Total incentives are capped at 5% of qualifying investment, or 7.5% in rural counties (20,000 people or less), and no awards are approved before January 1, 2026. The authority can give grants, loans, forgivable loans, or royalties to help close deals. Communities may grant up to 10 years of property tax exemption on new value from the project, excluding school districts. You may stack other federal, state, or local incentives, but the authority can bar extra aid from its own programs. The authority budgets its funds each year to run these programs and provide project help.
Sponsors & Cosponsors
Sponsor
COMMITTEE ON WAYS AND MEANS
Affiliation unavailable
Cosponsors
There are no cosponsors for this bill.
Roll Call Votes
House vote • 5/14/2025
Passed House
Yes: 84 • No: 3
legislature vote • 5/14/2025
Amendment H-1351
Yes: 29 • No: 58
Senate vote • 5/13/2025
Passed Senate
Yes: 44 • No: 1
Actions Timeline
Explanations of votes.
6/27/2025legislatureExplanation of vote.
6/27/2025legislatureSigned by Governor.
6/6/2025GovernorFiscal note.
6/6/2025legislatureReported correctly enrolled, signed by President and Speaker, and sent to Governor.
5/23/2025SenateExplanation of vote.
5/20/2025legislatureMessage from House.
5/14/2025HouseImmediate message.
5/14/2025legislaturePassed House, yeas 84, nays 3.
5/14/2025HouseAmendment H-1351, yeas 29, nays 58, filed, lost.
5/14/2025legislatureSubstituted for HF 1054.
5/14/2025legislatureRead first time, passed on file.
5/14/2025legislatureFiscal note.
5/14/2025legislatureMessage from Senate.
5/14/2025SenateImmediate message.
5/13/2025legislaturePassed Senate, yeas 44, nays 1.
5/13/2025SenateAmendment S-3175 filed, adopted.
5/13/2025legislatureFiscal note.
5/13/2025legislatureCommittee report, approving bill.
5/12/2025legislatureIntroduced, placed on Ways and Means calendar.
5/12/2025legislature
Bill Text
As Introduced
Enrolled
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