By Audrey Regan, Communications Intern
A new tool has been given to economic developers across the state of Iowa to help create jobs and facilitate the growth of the biorenewable chemical industry in Iowa. The Biorenewable Chemical Tax Credit Program bill – the first in the world of its kind to specifically address the emerging biochemical industry – was passed by the Iowa Legislature and signed by Governor Branstad in April.
The bill authorizes up to $10 million annually in tax credits for ten years to support the rapidly growing biorenewable chemical industry in Iowa. Administered by the Iowa Economic Development Authority, this bill creates an eligible credit of $0.05 per pound for the production of qualifying renewable chemicals in a given year.
Thanks to this new tool, it has been estimated by state revenue officials that in the next 10 years, up to six new companies will produce 600 million pounds of renewable chemicals, supported by up to $30 million in tax credits.
In addition to the creation of new companies and jobs, up to 25 existing companies in the state of Iowa will also benefit from this bill by being able to produce eligible renewable chemicals totaling more than 1.25 billion pounds or more, supported by $62.5 million in renewable chemical production tax credits.
In a report commissioned last January by Iowa’s Cultivation Corridor with support from Iowa Biotechnology Association, it was noted that an extremely beneficial opportunity existed in Iowa if state lawmakers could create a tax incentive to help build the new industry.
Studies showed that strategic investments made by the State of Iowa in the development of the grain ethanol industry in the U.S. led to a significant growth in the state. The investments made by the state paid back dividends to Iowa in the form of job creation, and increased tax receipts for countries and the State that annually equal the original tax abatement.
Thanks to the Biorenewable Chemical Tax Credit Program, Iowa will remain a leader in the bioeconomy and capitalize on a unique opportunity to lead the way in the emerging biorenewable chemical industry.