This blog was last updated on December 22, 2025
Iowa imposes a statewide sales and use tax rate of 6%. The state does allow local jurisdictions to levy additional sales taxes.
What’s Taxable in Iowa?
Iowa sales and use tax applies to the sale of tangible personal property and certain enumerated services. Sellers selling taxable goods and/or services must comply with Iowa tax laws and remit taxes to the state.
Examples of taxable items and services include:
- Clothing
- Prewritten computer software and certain related services
- Optional service or warranty contracts for computer software maintenance or support services
- Financial institution service charges
- Information services
- Certain services related to the trades, such as electrical work, carpentry, furniture repair, household appliance repair, lawn care, etc.
- Non-prescription medical items or drugs
- Software as a Service (SaaS)
Sales Tax Nexus in Iowa
A seller is liable to collect and remit Iowa sales tax in Iowa if they meet the state’s nexus requirements. Nexus can be established through either physical or economic presence.
Iowa: Physical Nexus
Physical presence is created by having a business location, office, warehouse, vehicle, employee, or other representative operating in the state of Iowa.
Iowa: Economic Nexus
Iowa enforces economic nexus for remote sellers. If your business has over $100,000 in sales during the previous calendar year, you may be required to register for and collect Iowa sales tax.
Learn more on the Remote Sellers & Marketplace Facilitators page on the Iowa Department of Revenue website.
Iowa Sales Tax Exemptions
Certain sales in Iowa are considered generally exempt from the sales and use tax requirements.
Exempt Products and Services
- Most services (unless Iowa statutes specify otherwise)
- Food and food ingredients
- Agricultural items
- Medical equipment, especially provided via prescription
Entity or Use Based Exemptions
Additionally, Iowa exempts sales to certain entities from the sales/use tax, including the following:
- Certain qualified nonprofit entities
- 501(c)(3) and 501(c)(4) organizations
- Churches and houses of religious worship
- Nonprofit private educational institutions
- Certain wholesalers
- Retailers selling for resale
- Items used or manufacturing or processing
- Qualifying farm or industrial machinery/equipment
- Qualifying computers used in processing or storage of data or information by an insurance company, financial institution, or commercial enterprise
- Government
How to Claim Sales Tax Exemption in Iowa
To claim an exemption, an entity must provide an exemption certificate with the sale. The Treasury accepts form 31-014 as the most commonly used form.
Iowa Filing and Remittance Requirements
Iowa offers multiple methods for filing and remitting sales and use tax:
- E-filing through GovConnectIowa
- Simplified Electronic Return (SER) for SST participants and their affiliates
- Paper filing:
- Form 32-028
Frequently Asked Questions
Is Iowa a part of the Streamlined Sales Tax (SST) initiative?
Yes, Iowa is part of the Streamlined Sales Tax (SST) initiative, a multi-state agreement designed to simplify and standardize sales tax rules.
Does Iowa have sales tax holidays?
Yes, Iowa does offer a sales tax holiday.
Are there any special point of sale fees in Iowa?
Point-of-sale fees are fixed amount or rate-based assessments levied on certain products or services at the time of sale and paid by the final consumer at retail. For example, Iowa imposes the following point of sale fees:
- Bottle Deposit
- E911
Does Iowa apply sales tax to shipping charges?
Generally, Iowa exempts shipping/handling/delivery charges so long as they are separately stated.
For sourcing sales tax, is Iowa origin or destination based?
Iowa is destination-based for sales tax.
Can I use the Simplified Electronic Return (SER) in Iowa if I’m not in the SST Model 1 program?
Yes. Iowa accepts Simplified Electronic Returns (SER) from any seller or tax provider that can transmit the return properly. You don’t need to be in the SST Model 1 program to use the SER—providers like Sovos can file on behalf of any client who opts into that method.]; For more information regarding permitted forms for returns, please reference the Iowa Department of Taxation Streamlined Sales Tax website.
How to Register for an Iowa Sales Tax License?
Iowa businesses or individuals selling tangible personal property or certain services to Iowa consumers may need register to collect sales tax when meeting qualifying requirements. More information may be found here
Additional Resources
For more information on U.S. sales tax compliance across all 50 states, check out our:
State-by-State Sales Tax Guide
Looking for an easier way to manage sales tax in Iowa and beyond? Learn how Sovos simplifies compliance.