Iowa: Sales Tax Handbook
What purchases are exempt from the Iowa sales tax?
While the Iowa sales tax of 6.00% applies to most transactions, there are certain items that may be exempt from taxation. This page discusses various sales tax exemptions in Iowa.
Sales Tax Exemptions in Iowa
Any items which are used in the construction and agriculture are considered to be exempt. In addition, any equipment which is used for farming or for building does not require a sales tax to be levied. Items used for advertising such as envelopes and promotional materials are not considered to be subject to tax fees.
Many states have special, lowered sales tax rates for certain types of staple goods - such as groceries, clothing and medicines. Restaurant meals may also have a special sales tax rate. Here are the special category rates for Iowa:
These categories may have some further qualifications before the special rate applies, such as a price cap on clothing items. Groceries are generally defined as "unprepared food", while pre-prepared food may be subject to the restaurant food tax rate.
Candy and soda may be included or excluded from any preferential tax rate depending on whether or not the state considers them to be a "grocery":
Are services, shipping, installation, etc taxable in Iowa?
The taxability of transactions involving services, shipping, and installation of tangible goods can be slightly complicated with various laws applying to slightly different situations. To learn more about how these transactions, and other more complicated situations, are subject to the Iowa sales tax see the Iowa sales taxability FAQ page.
Other tax-exempt items in Iowa
This table lists a number of additional categories of goods and services that are exempt from Iowa's sales tax. For a list that also shows taxable items, see the list of taxable and nontaxable items in Iowa.
|Food and Meals|
|Manufacturing and Machinery|
|Utilities & Fuel||EXEMPT|
|Medical Goods and Services|
|Medical Devices||EXEMPT *|
|Newspapers and Magazines|
|General Occasional Sales||EXEMPT *|
|Optional Maintenance Contracts|
|Parts Purchased for Use in Performing Service Under Optional Maintenance Contracts||EXEMPT|
|Transportation Services||EXEMPT *|
|Software and Digital Products|
|Canned Software - Downloaded||EXEMPT|
|Custom Software - Delivered on Tangible Media||EXEMPT *|
|Custom Software - Downloaded||EXEMPT|
* See notes in category taxability page for details
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