Renewable Chemical Production Tax Credit
Offers Iowa producers a tax credit for biomass-derived high-value chemical manufacturing output.
Iowa's Renewable Chemical Production Tax Credit, administered by the Iowa Economic Development Authority, incentivizes the domestic production of 30 designated high-value chemicals derived from biomass feedstocks. The state designates these chemicals in recognition of Iowa's agricultural infrastructure and its goal to advance renewable chemical manufacturing as an economic sector. The production incentive is $0.05 per pound of qualifying chemical produced, applied as an Iowa tax credit against the company's income tax liability for the applicable production year. The annual cap for startup companies is $1 million per year.
To qualify, a company must be physically located in Iowa, operated for profit under single management, and must have located, organized, or expanded operations in Iowa on or after April 6, 2016. Companies providing professional services, healthcare, medical treatment, or retail operations are explicitly excluded. Applicants must be in compliance with all prior program agreements and must commit to maintaining Iowa operations. Applications cover the prior calendar year's production: the 2026 application window for chemicals produced during 2024 ran February 15 through March 15, 2026, and applications are submitted through govconnect.iowa.gov.
The per-pound structure rewards companies that scale production volume — a company producing 5 million pounds of qualifying chemicals annually would generate a $250,000 credit, while a startup producing 20 million pounds would approach the $1 million startup cap. Companies entering this program should map their production output to the 30 designated chemicals before applying, as only those specific compounds qualify. The relatively narrow annual application window (approximately one month) makes timely preparation critical. Contact: Mark Laurenzo, mark.laurenzo@iowaeda.com, 515.348.6191.
Provides a $0.05-per-pound Iowa tax credit for production of 30 designated high-value chemicals derived from biomass feedstocks, capped at $1 million per year for startup companies.
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