New MEGA incentive program now law in Iowa
New MEGA Incentive Program
Major Economic Growth and Attraction (MEGA) Program targets $1B FDI projects
Foreign businesses will now have a significant financial incentive to invest in the Hawkeye State with the new Major Economic Growth and Attraction (MEGA) Program. Targeting investments of at least $1 billion, foreign companies will now be able to acquire agricultural land and seek significant tax credits from the state.
Signed into law by Governor Kim Reynolds, SF 574 created the MEGA Program. Administered by the Iowa Economic Development Authority (IEDA), up to two foreign companies hitting the $1 billion investment requirement and engaged in advanced manufacturing, biosciences, or research and development may apply for the new incentive.
To be eligible for the MEGA Program incentive, the business will need to invest at least $1 billion in eligible expenditures and meet a minimum job creation of 50% by project completion. Both project commitments must be met within five years of approval. The project must also be located on a certified site of at least 250 acres.
The incentives under the MEGA Program include:
5% investment tax credit of the qualifying capital spend
25% sales tax refund on utilities, tangible personal property, and services related to the construction / equipping of the facility
3% withholding tax credit for employees meeting the qualified wage thresholds set forth in the agreement
The MEGA program will be enacted on July 1, 2024 with the first potential agreement being signed in Fiscal Year 2025. The first claims would be in Fiscal Year 2028. There are no program caps, and according to the legislative intent, all the claims will be either applied to the company’s respective liability or provided as a refund.
Businesses approved for the MEGA program may still apply for additional federal, state, and local incentives, including property tax exemptions. The High Quality Jobs Program and the Targeted Jobs Withholding Tax Credit, along with other discretionary IEDA incentives, may not be secured if pursuing the MEGA Program.
To support communities compete with site development and readiness, the legislation also allocates $300,000 to Iowa’s Certified Sites Program.
To learn more about the new program and begin exploring if your business may be eligible, contact the Hickey Incentives Team today!