Iowa’s newest incentive program has business leaders in the advanced manufacturing, bioscience, insurance and finance, and technology sectors eyeing the state as their next expansion location. Effective January 1, 2026, Iowa replaced its longtime High Quality Jobs Program with the Business Incentives for Growth program, known as BIG. Administered by the Iowa Economic Development Authority (IEDA), the program helps eligible companies offset the costs of locating, expanding, or modernizing facilities in the state. The program approved the first 5 incentive awards in February, representing $268.2 million in capital investment and 536 new jobs.
What the Program Actually Offers
BIG is built around 3 core incentives that work together to reduce the cost of capital investment in Iowa. Here’s a breakdown of what’s available for your next project:
- A performance-based investment credit: This credit is earned when qualifying assets are placed in service. The credit is spread over 5 years and is fully refundable. If the credit exceeds what you owe in Iowa income taxes, the state refunds the difference. It’s not transferable, but can be carried forward and applied against several tax types including corporate income, franchise, and insurance premium tax.
- Sales tax refunds: Applied to sales and use taxes paid on construction materials, utilities, tangible personal property, and certain services used to build or equip your facility.
- Local property tax exemptions: Applied to the value added to real property through your project. This requires separate approval from your city or county and can last up to 10 years.
How the Numbers Work
Most awards are capped at 5% of a project’s qualifying investment. If a project is located in a county with a population of 20,000 or fewer, that cap goes up to 7.5%. That rural premium is a real and meaningful distinction for those that are still weighing locations.
The wage requirements are specific. New jobs must pay at least 100% of the local labor-shed wage, and retained jobs must pay at least 120%. Those figures are based on covered wage data from Iowa Workforce Development and vary by location. All full-time employees must be offered a comprehensive benefits package.
Only projects that show extensive economic impact to state GDP and Iowa economic diversification will be awarded the maximum amounts. Priority awards go to projects that involve real property investment, major facility upgrades, or long-term leases that extend beyond 10 years. The program does not support retail, service providers, data centers, or routine projects.
For context, the first round of awards shows how IEDA is applying this in practice. Arconic received $6.55 million in tax credits on a $131 million investment, right at the 5% urban cap. Sewer Equipment Company of America in Vinton received $84,375 on a $3 million investment, which illustrates that IEDA awards below the maximum based on the specifics of each project.
The program has a $50 million annual ceiling on BIG awards, which is a reduction from the $68 million limit under the predecessor program. Awards also count against a broader $110 million cap on all IEDA business development tax credits in a given year. This is a more constrained program than what came before it, and that matters for planning purposes.
The Application Process Starts Before Any Project Activity
We cannot emphasize enough – timing and planning are key. To receive any of the available credits and incentives, you must be approved by the program before beginning any project activity. That means no construction, no equipment purchases, no lease signings, and most critically, no announcement.
The process starts with a confidential pre-application. If invited to apply, a full application is due by the 15th of the month and must be signed by month’s end to be reviewed at the next board meeting. The IEDA Board meets on the third Friday of each month.
If you are a business leader engaged in the program’s target sectors and you’re interested in taking advantage of this program, we’d love to help you prepare a strong application and navigate the complexities of reporting obligations to help you maximize the benefits and avoid incentive recovery for non-compliance. Reach out to Caitlin Glenn at cglenn@keatax.com to start planning for your next project.
