Iowa Sales Tax Guide 2025: An Extensive Overview

This Iowa Sales Tax Guide provides an extensive overview of the state’s sales tax laws, including rates, exemptions, and filing requirements. Use this guide to navigate Iowa sales tax regulations and ensure your business stays compliant.

Iowa Sales Tax

Sales tax in Iowa was first introduced in 1934 as a way to generate state revenue. Over the years, Iowa sales tax law has evolved to include additional local option taxes and the Iowa sales and use tax, which applies to both in-state purchases and taxable goods brought into Iowa for use.

Iowa Sales Tax Rate

Jurisdiction	Sales tax rate
State tax	6.0%
Local tax	0.0%-3.0%
Combined Tax	6.0% - 9.0%

Learn more and check out the city-based tax rates in Iowa.

Iowa Sales Tax Calculator

To calculate sales tax in Iowa, you multiply the purchase price of a taxable item by the state sales tax rate, which is 6%. If the transaction occurs in a jurisdiction with a local option tax, you add the applicable local tax rate to the state rate for the total sales tax.

Example:

Suppose you buy a $100 item in a location with a 6% state sales tax and an additional 1% local tax.

1. State Sales Tax: $100 × 0.06 = $6.00
2. Local Sales Tax: $100 × 0.01 = $1.00
3. Total Sales Tax: $6.00 + $1.00 = $7.00
4. Final Price with Tax: $100 + $7.00 = $107.00

This method ensures you accurately calculate the total Iowa sales tax due for any taxable transaction.

FAQs on Sales Tax

Does Iowa have 7% sales tax?

No, Iowa’s state sales tax rate is 6%, but local option taxes can increase the total rate to a maximum of 7%.

What is the Iowa city sales tax rate?

The city sales tax rate in Iowa depends on the local option tax, which is typically 1%, added to the state rate of 6%, resulting in a combined rate of up to 7%.

How to calculate sales tax in Iowa​?

Multiply the purchase price by the state rate of 6%, then add any applicable local option tax rate. For example, a $100 purchase with a 7% total tax rate would have $7 in sales tax.

Who pays sales tax in Iowa?

Consumers pay sales tax in Iowa at the time of purchase, while businesses are responsible for collecting and remitting it to the state.

Iowa Sales Tax Nexus

Type of Nexus	Threshold
Physical presence	Any physical presence
Economic nexus	$100,000 in sales

FAQs on Sales Tax Nexus

What constitutes sales tax nexus in Iowa?

Sales tax nexus in Iowa is established when a business has a physical presence (e.g., office, employees, or inventory) or meets the economic nexus threshold of $100,000 in annual sales to Iowa customers.

Does Iowa collect sales tax on out-of-state sales?

Yes, Iowa requires out-of-state businesses to collect sales tax if they meet the economic nexus threshold, even without a physical presence in the state.

Iowa Sales Tax Exemptions​

Iowa offers sales tax exemptions for certain goods and services, including items purchased for resale, manufacturing equipment, agricultural supplies, and specific nonprofit transactions. These exemptions help businesses and individuals reduce tax liability on qualifying purchases. Proper documentation, such as an exemption certificate, is required to claim these benefits.

FAQs on Sales Tax Exemptions

Where can I download the Iowa state tax exempt form?

To download the Iowa Sales/Use/Excise Tax Exemption Certificate (Form 31-014), visit the Iowa Department of Revenue's official website. The form is accessible here.

Are there Iowa state sales tax exemptions?

Yes, some items are tax-exempt in the state. Iowa state sales tax exemptions aim to boost businesses’ savings.

What items are not taxed in Iowa?

Items not taxed in Iowa include unprepared food intended for home consumption, prescription medications, and certain medical devices.

Is food tax-free in Iowa?

Yes, unprepared food items intended for home consumption are generally tax-free in Iowa.

Does Iowa have sales tax on clothing?

Iowa imposes a 6% state sales tax on clothing, with an additional local option tax of up to 1%, resulting in a maximum combined rate of 7%.

Does Iowa charge sales tax on SaaS?

Yes, Iowa charges sales tax on Software as a Service (SaaS) products.

Does Iowa require sales tax on services?

Yes, Iowa requires sales tax on certain services, including those rendered, furnished, or performed.

What is the sales tax in Iowa for SaaS?

The sales tax rate in Iowa for SaaS products is the standard state rate of 6%, plus any applicable local option taxes, up to a maximum combined rate of 7%.

What's the Iowa Sales Tax Registration process?

Registering for Iowa sales tax is essential for businesses that sell taxable goods or services or meet the state's economic nexus thresholds. Follow the steps below to complete the Iowa sales tax registration process and ensure compliance with state requirements.

1. Determine Your Obligation to Register

Confirm if your business needs to collect Iowa sales tax, either through a physical presence or by meeting the economic nexus threshold of $100,000 in annual sales.

2. Gather Necessary Business Information

Prepare details such as your business name, Federal Employer Identification Number (EIN), business structure, and estimated monthly sales tax liability.

3. Visit the Iowa Department of Revenue Website

Go to the Iowa Department of Revenue and access the Business Tax Registration section.

4. Create an Account or Log In

Set up a new account or log in to your existing account in the Iowa Department of Revenue portal to begin the registration process.

5. Complete the Registration Form

Fill out the online registration form with your business information, selecting "Sales Tax Permit" as the tax type. Provide accurate details about your business operations and sales.

6. Review and Submit

Double-check the information provided, then submit your application. Registration is free, and you will receive confirmation upon approval.

7. Receive Your Sales Tax Permit

Once approved, you’ll receive your Iowa sales tax permit, enabling you to collect and remit sales tax. Keep the permit details accessible for reference.

Do you need a sales tax license in Iowa?

Yes, businesses selling taxable goods or services or meeting the economic nexus threshold in Iowa must obtain a sales tax license to legally collect and remit sales tax.

How do I get a sales tax ID in Iowa?

You can obtain a sales tax ID by registering online through the Iowa Department of Revenue’s Business Tax Registration portal. The process is free and requires business details such as your EIN and type of operations.

 Iowa Sales Tax Filing

Filing Iowa sales tax involves reporting and remitting the sales tax collected from customers to the Iowa Department of Revenue. Depending on your sales volume, filings may be required monthly, quarterly, or annually, with payments typically due on the 20th of the month following the reporting period. Accurate recordkeeping and timely submissions are essential to avoid penalties or interest charges.

What are the Iowa filing requirements​?

Businesses collecting Iowa sales tax must file returns regularly, detailing taxable sales and the amount of tax collected. Filing frequency is determined by sales volume and can be monthly, quarterly, or annually.

How often do I file sales tax in Iowa?

The filing frequency—monthly, quarterly, or annually—is assigned by the Iowa Department of Revenue based on your business’s reported sales tax liability. Most businesses with high sales volume file monthly.

Do I need to file an Iowa tax return?

Yes, any business with a valid Iowa sales tax permit must file a return, even if no tax was collected during the reporting period, to maintain compliance.

How to file sales tax in Iowa?

File your sales tax return online through the Iowa Department of Revenue’s eFile & Pay system. Submit the report by the due date, and remit any tax owed electronically.

Iowa Sales Tax Due Date​

Iowa sales tax returns are typically due on the 20th of the month following the reporting period, whether filed monthly, quarterly, or annually. The filing frequency is determined by the business’s sales volume, with most high-volume businesses filing monthly. Ensuring timely submission helps businesses avoid penalties and interest charges.

Filing Frequency	Due Date
Monthly	Last day of the following month (Ex. Due date for January is February 28)
Quarterly	Last day of the month following the quarter’s end. (Ex. Due date for Q1 (January 1 – March 31) is April 30)
Annually	January 31 of the following year

How often is Iowa sales tax due?

Iowa sales tax is due monthly, quarterly, or annually, depending on the business’s assigned filing frequency, which is determined by the sales volume.

Does Iowa have a sales tax holiday?

Yes, Iowa has a sales tax holiday on the first Friday and Saturday of August each year, during which select clothing and footwear items priced under $100 are tax-exempt.

Iowa Sales Tax Revenue Service

For any concerns about Iowa sales tax registration, filing or general inquiries, you can reach out to them through the following:

• Phone: 515-281-4102
• Email: information.services@iowa.gov
• Website: https://www.iowa.gov/

And there you have it—your guide to Iowa sales tax. You can avoid the hassle and simplify your tax compliance journey with Kintsugi. Sign up or book a demo now.