About this programme
The Innovation Fund Tax Credit, established under Iowa Code section 15E.52, gives taxpayers a state tax credit for making equity investments into certified Innovation Funds, venture funds that in turn back early-stage Iowa companies. The Iowa Economic Development Authority (IEDA) oversees the program, with its Board approving both fund certifications and tax credit issuance.
The purpose is to stimulate venture capital investment in innovative Iowa businesses and strengthen the state's innovation economy, with a focus on advanced manufacturing, biosciences, and information technology.
How it works
Investors get a credit worth 25% of their equity cash investment into a certified Innovation Fund. Eligible investment forms include stock, membership interests, partnership interests, or near-equity instruments.
Excess credit beyond a taxpayer's liability carries forward up to 5 years, and credits can be transferred once, in whole or in part. Credits can be claimed against individual income, corporate income, franchise, insurance premiums, and moneys/credits taxes.
To become certified, an Innovation Fund must invest at least $3 million in Iowa businesses and hold at least $3 million in binding investment commitments, provide multiple rounds of early-stage funding, use rigorous evaluation methods, collaborate with state entities and regents institutions, and show a commitment to commercializing university research.
Credits are issued first-come, first-served, subject to the annual maximum allocation set under Iowa Code section 15.119.
Investments made more than 120 days before the fund's certification date are not eligible for the credit. Investors must apply in the first available filing window after their investment date.
Both fund certification and investor tax credit applications go through the GovConnectIowa portal (govconnect.iowa.gov).
Who can apply
The receiving company must have its principal place of business in Iowa and demonstrate high growth potential; it must be early-stage.
The certified Innovation Fund itself must hold at least $3 million in commitments and invest at least $3 million in Iowa businesses.
Investors must put in cash for equity in a certified fund, made no more than 120 days before the fund's certification, and must apply within the designated annual filing window.
How to apply
- For fund certification: create an account and log in to GovConnectIowa, select 'Certify an Innovation Fund' under Tax Credits, upload the required documentation and answer the fund questions, then after certification upload the investor list.
- For investors: create an account at GovConnectIowa, click 'Apply for a Tax Credit,' navigate to 'Innovation Fund or Redevelopment Tax Credits,' and submit the application within the September 1 to December 31 filing window.
Documents you’ll typically need
- Fund certification documentation (uploaded through GovConnectIowa)
- Investor list (submitted by the fund after certification)
- Program Fact Sheet
- Certification Eligibility Requirements Checklist
Frequently asked
How big is the tax credit?
25% of an investor's equity cash investment into a certified Innovation Fund.
When can I apply for the credit?
During the annual filing window, September 1 through December 31. Investors must apply in the first available window after their investment date.
Can I invest and claim the credit before the fund is certified?
Not much before. Investments made more than 120 days before the fund's certification date are not eligible for the credit.
What happens if my credit is more than I owe in tax?
Unused credit carries forward for up to 5 years, and the credit can also be transferred once, in whole or in part.
Is there a limit on how much credit is available each year?
Yes. Credits are issued on a first-come, first-served basis, subject to the annual maximum set under Iowa Code section 15.119.
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Reviewed 2026-09-25. Programmes change, so check eligibility, amounts and deadlines on the official page before you apply. CapEasy is a private firm and is not part of any government body.