5 things to know about the first biochemical production tax credit

July 25, 2017

5 things to know about the first biochemical production tax credit

Last year Iowa passed its Renewable Chemicals Production Tax Credit, which the USDA has called the “strongest” incentive for the biobased chemical industry.

The program allocates $100 million in tax credits over ten years to be applied to the manufacturing of 40 key building block chemicals.  Here are five quick things to know about the Renewable Chemicals Production Tax Credit program.

  1. No other state has an incentive like this

The program offers tax credits equal to 5 cents per pound of qualified chemicals produced, and the state will have the authority to grant up to $10 million in tax relief annually. A 2016 USDA report, “A Economic Impact Analysis of the U.S. Biobased Products Industry,” says Iowa’s Renewable Chemicals Production Tax Credit program, “represents the strongest existing incentive package for the global biobased chemical industry.”

  1. It’s not for food, feed or fuel

Products eligible under this program must not be primarily used for food, feed or fuel. However, food additives may be eligible.

  1. Iowa has the infrastructure and raw materials in place for advanced bioprocessing

Iowa has a network of more than 50 bioprocessing sites and one of the nation’s highest amounts of harvestable biomass. In addition, the state’s robust transportation infrastructure provides easy access to national and international markets.

  1. Bioprocessing research is concentrated in Iowa

Iowa is home to the National Science Foundation Engineering Research Center for Biorenewable Chemicals led by Iowa State University (ISU), the ISU BioCentury Research Farm and the University of Iowa’s Bioeconomy Institute. With these essential pieces already in place, the passing of this bill further cements Iowa’s position as an innovative leader in a growing industry that accounts for more $250 billion in revenue and thousands of jobs each year.

  1. This is a tax credit built on a stable foundation

The legislation creating the Renewable Tax Credit Program passed the Iowa State Senate 46-3 and the House 95-1, indicating its broad support, and demonstrating how businesses in Iowa benefit from fair and consistent government.

For more information on this tax credit program and doing business in Iowa, visit iowaeconomicdevelopment.com/bioproducts.

 

 

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