R&D Binder

Short answer. It depends on the tax year. For tax years beginning before 2026, you compute the Research Activities Credit on Form IA 128 (or IA 128S for the simplified method), carry it to the IA 148 Tax Credits Schedule, and attach federal Form 6765. For tax years beginning in 2026 or later, you first get certified by the Iowa Economic Development Authority, then apply each year with an independent Iowa CPA's verification, and claim the awarded credit on the IA 148 for the following tax year.

Key facts

Tax years before 2026Form IA 128 or IA 128S, carried to the IA 148 (credit code 58)
Tax years 2026 onIEDA certification, then an annual credit application
Federal Form 6765Required under both
CPA verificationRequired from 2026, by an independent CPA licensed in Iowa
Application deadlineJanuary 31 after the federal return is filed and accepted

Which process applies to you

The dividing line is the first day of the tax year, not the day you file.

Tax years beginning before January 1, 2026 stay under the old Research Activities Credit, claimed on the return. That includes a fiscal year that started in 2025 and ends in 2026. Tax years beginning on or after January 1, 2026 fall under the new R&D Tax Credit Program run by the Iowa Economic Development Authority (IEDA), created by Senate File 657.

You can't claim the old credit and the new one on the same return. If you are catching up on 2025 or amending an earlier year, use the first process below. For 2026 research, use the second.

Tax year 2025 and earlier: claim it on the return

The old credit is computed on an Iowa form and carried to the credits schedule, much like the federal credit.

  1. Claim the federal credit first. Iowa's credit follows your federal Section 41 claim for the same year, and Form 6765 is attached to the Iowa return.
  2. Compute the credit on Form IA 128 or IA 128S. IA 128 is the regular method and IA 128S the alternative simplified method. Use the same method you used on the federal return.
  3. Carry it to the IA 148 Tax Credits Schedule. The Research Activities Credit is credit code 58. Code 59 is the Supplemental Research Activities Credit, which IEDA awards to businesses with High Quality Jobs program contracts. The contract sets the amount, and the claim needs the certificate number.
  4. Pass-through entities report it to owners. Partnerships and S corporations filing IA 1065 or IA 1120S report the credit on their Schedule K-1s under the same code, and each owner claims their share on their own Iowa return.
  5. Claim it by the return due date, including extensions. After that, the credit can only be increased through an amended return filed within six months of the due date, or through an IRS or Iowa Department of Revenue audit.

How much of the old credit comes back as cash

Only part of any excess is refunded, and the rest does not carry forward.

For tax year 2025, credit above your Iowa tax is refunded at 70 percent under code 58 and 85 percent under code 59. The rest expires. For a SaaS company, two details in the 2025 IA 128 instructions matter: only 40 percent of Iowa supply costs count, and payments for the use of someone else's computers no longer count as research expenses.

Tax year 2026 on: two steps with the state

You don't compute this credit on your return. You get certified, apply, and IEDA tells you what you were awarded.

  1. Get certified as a qualified business. Apply through the Opportunity Iowa Portal. For the first certification period, IEDA accepted applications from February 2 through September 30, 2026, with decisions expected within 90 days. IEDA has not yet published windows for later years. Eligible industries are advanced manufacturing, bioscience, insurance and finance, and technology and innovation, which is where software companies fall. Certification lasts up to five years.
  2. File your federal return with Form 6765. The Iowa application is based on the Iowa eligible expenditures included in Section F of the Form 6765 on your most recently filed and accepted federal return.
  3. Have an independent CPA verify the expenses. The CPA must be licensed to practice in Iowa and independent of your business, and completes IEDA's CPA Verification Form. The standard is whether the expenses are, more likely than not, eligible. It is not an audit. The rule lists the items the CPA has to address, including whether each project meets the four-part test and which wages were for work physically done in Iowa. For each one, the CPA describes the documents relied on.
  4. Apply by January 31. The deadline is January 31 following that federal return, and IEDA asks businesses to try to apply within 90 days of federal acceptance. One application covers the whole filing group, with the common parent as the applicant.
  5. Receive your award. IEDA expects to decide awards by about April 1 and issues a tax credit certificate. The award is up to 3.5 percent of your eligible Iowa expenditures, scaled down pro rata when statewide demand passes $40 million. In IEDA's own worked example, every business ends up at 2.26 percent.
  6. Claim it on the IA 148 the following tax year. The credit is claimed in the tax year immediately after the year you spent the money. As of September 2026, Iowa had not published the IA 148 credit code for the new credit. It is refundable, or you can apply the overpayment to the next year's tax instead. It can't be transferred. S corporation, LLC, and partnership owners claim their share.
  7. File the annual report. Certified businesses report to IEDA each January 31 through the portal.

A calendar-year 2026 example

The new program runs about a year behind the spending. IEDA's own timeline for a calendar-year company:

  • 2026: the research is done and the expenses are incurred.
  • March 15, 2027 or April 15, 2027: the federal return with Form 6765 is due (partnerships and S corporations in March, C corporations in April).
  • January 31, 2028: the IEDA credit application is due, with the CPA verification.
  • Around April 1, 2028: IEDA decides awards and issues certificates.
  • 2027 Iowa return: the awarded credit is claimed on the return for the tax year after the spending year.

What to have ready

The CPA verification asks for the same evidence that supports the federal claim, narrowed to Iowa.

Expect to show that each project meets the four-part test, that costs are tracked by business component, which wages were for work physically done in Iowa, and how contract research and cloud costs were allocated. If the federal credit is later reduced, you have to tell IEDA within 30 days.

R&D Binder produces the federal Section 41 documentation, including the business-component analysis and a QRE workpaper that can be broken out to Iowa. We don't perform the independent CPA verification or file the IEDA application. Whether your facts qualify, and which credit you claim, is for your CPA to decide.

The full state overview, the federal Section 41 work it builds on, and related state guides:

Sources

Every claim on this page traces to a primary authority. Each source below is independent and verifiable.

Get documentation built to survive an exam

R&D Binder produces the federal Section 41 binder and the Iowa state workpaper from one engagement, both built to survive an exam.

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