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Iowa's pay-on-performance steel mill incentives, explained

Updated October 21, 2026 · Numbers as published by each source on the date shown

Iowa amended its MEGA program on October 2, 2026, so one company in a rural county can receive tax incentives of up to 10% of its qualifying investment, spread over 10 years. For Mesabi Metallics' planned $15 billion steel mill in Lee County, that could be about $1.36 billion. State leaders say none of it is earned until the plant is built, running and hiring.

The project: a $15 billion mill in Lee County

Mesabi Metallics, a Minnesota-based iron ore mining company, plans to invest $15 billion to build and operate a steel plant in Lee County, in eastern Iowa, MPR News reports. The governor's office calls it the single largest investment in American steel manufacturing in US history. KTIV reports it could begin producing steel as soon as 2030.

What changed in the MEGA program

MEGA, the Major Economic Growth Attraction program, was created in 2024 to help Iowa compete for projects with more than $1 billion in capital investment. As first enacted, it allowed incentives of up to 5% each for two businesses. House File 2801, signed by Gov. Kim Reynolds on October 2, now also allows up to 10% for a single business in a rural county, spread evenly over 10 years and transferable to another party with state approval, Business Record reports.

The bill passed during a one-day special session, 75 to 17 in the House and 28 to 19 in the Senate, Construction Dive reports. It took effect when signed.

How pay-on-performance works

Business Record reports that MEGA credits are given once a project is completed and operational, at least 50% of the promised jobs are on the payroll, and those jobs meet wage requirements. "We do not issue any award until these plants ... are built, it is functioning ... with the attached jobs to that," Iowa Economic Development Authority Director Debi Durham told lawmakers. The credit is then spread over 10 years.

The program's existing rules also set out repayment. If a business falls short on jobs or investment, it repays, or loses, the same share of its incentives. Creating 50 percent of the required jobs means repaying 50 percent of the incentives received. Failing benefit requirements or program eligibility means repaying all of them.

House Speaker Pat Grassley said the law ensures "not a single dollar in performance incentives is earned until real facilities are built and high-paying manufacturing jobs are delivered."

Bar chart of possible Iowa incentives for the Lee County steel mill over 10 years: a 1.145 billion dollar investment tax credit, 154.35 million dollars in sales tax refunds and a 60.5 million dollar withholding tax credit, totaling about 1.36 billion dollars, earned only after the mill is built and hiring.
Source: Business Record, citing the Des Moines Register (Oct 9, 2026)

What the mill would make and how

The plant is expected to make low-emissions steel using direct-reduced iron and electric arc furnaces, with scrap steel and iron ore from the company's mine in Nashwauk, Minnesota, Construction Dive reports.

Jobs and the Minnesota ore link

The company expects to hire 6,000 construction workers and 1,750 permanent employees, KTIV reports. Business Record puts the permanent jobs at $48 an hour. Mesabi's chief executive, Joe Broking, said Iowa was chosen for its closeness to the Minnesota mine and its access to railroads and the Mississippi River. MPR News reports the mill will use iron ore mined on Minnesota's Iron Range.

The Monday Haul follows the mill and other big projects every week. Past issues are in the archive, and you can follow industry across the country on the live dashboard.

Questions raised during the vote

Most lawmakers backed the bill, but several Republicans and Democrats said the process felt rushed for a project this size and left little room for public input, Construction Dive reports. House Speaker Grassley noted the state incentive is only part of the cost, since the county could be responsible for infrastructure such as natural gas and water lines, according to KTIV.

What to watch next

The deal is not final. A memorandum of understanding gives Iowa 60 days, counted from the day Durham signed it, to negotiate exclusively with Mesabi Metallics, KTIV reports. Durham described three steps: the company files an application, the state and company finalize a contract, and the Iowa Economic Development Authority board approves the final deal. She told lawmakers she expects a full application to reach the board in November.

Common questions

How much is Iowa offering the Lee County steel mill?

The incentive for Mesabi Metallics could be $1.36 billion over a decade, according to the Des Moines Register as cited by Business Record. That includes a $1.145 billion investment tax credit, $154.35 million in sales tax refunds and a $60.5 million withholding tax credit.

When does the steel mill get its tax credits?

Business Record reports that MEGA credits are given once a project is completed and operational, at least 50% of the promised jobs are on the payroll and those jobs meet wage requirements. The credits are then spread over 10 years.

What happens if the mill misses its targets?

Under the MEGA program rules, a business that falls short on jobs or investment repays, or loses, the same share of its tax incentives. For example, creating 50 percent of the required jobs means repaying 50 percent of the incentives received.

Sources

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