Iowa’s New R&D Tax Credit: Two Steps Businesses Should Take Now

Last year, we discussed Iowa’s overhaul of its business tax incentives. Iowa’s new Research and Development Tax Credit is no longer merely claimed but rather will be awarded by the Iowa Economic Development Authority (IEDA) to applicants. Businesses must complete a new certification and annual application process, and the first of these deadlines is quickly approaching.

September 30 certification deadline

Businesses seeking the R&D credit should submit their qualified-business certification application through the IEDA portal by September 30, 2026. Certification is generally available for up to five years, subject to continued eligibility. The certification process requires the business to demonstrate that its primary operations are in an eligible industry and sector (as detailed here) and that it is actively conducting qualified research and development in Iowa. A business cannot apply for the R&D credit if it is not certified as a qualified business through this initial step.

Line up an independent CPA

Certification is only the first step. Each year, a certified business must submit an application based on eligible expenditures reported on its most recently filed and accepted federal R&D claim form. That annual application must include verification by an independent CPA authorized to practice in Iowa. The CPA cannot be employed by the business or a related entity.

The CPA’s work is not an audit, review, or attestation of engagement. Instead, the CPA must conclude that the claimed expenditures are, in the CPA’s professional judgment, more likely than not eligible, accurate, and complete in all material respects. The verification addresses federal research-credit eligibility under Internal Revenue Code sections 41 and 41(d), Iowa-specific adjustments.

Businesses should look to engage an appropriate CPA now.

Conclusion

The immediate priorities are to submit the IEDA certification application by September 30, 2026, confirm eligibility under the new industry and research requirements, and line up an independent Iowa CPA for the annual expenditure verification. Early preparation will be important because the new program requires substantially more Iowa-specific documentation than the former credit.