Iowa Sales Tax Calculator

Iowa sales tax rates: 6% state plus up to 1% local option

Iowa's state sales and use tax rate is 6%, and most of the state also pays a local option sales tax (LOST) of up to 1%, which is why the typical combined rate is 6.94% and the maximum is 7%. LOST applies to the same goods, services and digital products as the state tax.

LOST is adopted jurisdiction by jurisdiction. Within a single county, some cities may have the tax while others do not, and the unincorporated part of the county may or may not have it. Questions about when a local option vote is scheduled go to the county courthouse; the Department of Revenue only administers the tax once it is approved.

To check an address, use the Department of Revenue’s Sales Tax Rates Lookup, linked from its Local Option Sales Tax page. Because the only possible local rate is 0% or up to 1%, the difference between a LOST and non-LOST location is small, but it adds up on large purchases.

Iowa taxes on vehicles, hotels and services

Several common purchases in Iowa are not charged the ordinary sales tax and instead carry a different tax:

For a $30,000 car, the fee for new registration is $10 + $1,500 = $1,510. No local option tax is added because the vehicle is outside the sales tax.

Food, drugs and other exemptions

Most food and food ingredients are exempt from Iowa sales tax, including salty snacks such as chips, pretzels and popcorn. These food items remain taxable: alcoholic beverages, candy, dietary supplements, food sold through vending machines, prepared food, soft drinks and tobacco.

Prescription drugs are exempt when sold to the individual patient on a practitioner’s order, and the Department of Revenue counts dentists, optometrists, chiropractors, podiatrists and nurse practitioners as practitioners alongside medical doctors. The line is drawn at the pharmacy counter: if a doctor prescribes ibuprofen and the pharmacist fills and labels the order, it is exempt, but if the pharmacist tells you to pick up ibuprofen from the over-the-counter shelf, it is taxable. Iowa also taxes a long list of services, so check the department’s taxable services guidance before assuming only goods carry tax.

Iowa’s annual sales tax holiday

Iowa holds a sales tax holiday on the first Friday and Saturday of August, starting at 12:01 a.m. Friday and ending at midnight Saturday. Sunday is not included. During the holiday, neither state sales tax nor local option tax is charged on an article of clothing or footwear priced under $100.

The limit is per item, not per receipt: five $80 shirts are all exempt, but a single $100 coat is fully taxable, not just the part above $100. Watches, jewelry, umbrellas, sporting equipment and athletic or protective gear not normally worn every day do not qualify.

Worked example and use tax on out-of-state orders

In a LOST city at 7%, a $400 washer costs $28.00 in tax, $428.00 in total. In a jurisdiction with no LOST it would be $24.00. To back the tax out of a $107 receipt at 7%, divide by 1.07: the price was $100.00 and the tax $7.00.

If an out-of-state seller does not collect Iowa tax, you owe use tax at the 6% state rate. There is no local option use tax, so LOST is not added to the use tax you report yourself (a remote seller that does collect will charge LOST on delivery to a LOST address). Individuals and businesses that owe $1,200 or more of use tax a year must hold a permit; those who owe less can file the Iowa Non-Permit Use Tax Return.

Iowa against its neighbors

Iowa's 6.94% average combined rate is lower than Illinois (8.98%) and lower than Minnesota (8.14%). Iowa's cap on local tax keeps its spread narrow: no Iowa address pays more than 7% on general merchandise, while Illinois can reach 11.00%.

Common Iowa sales tax mistakes

These are the errors we see most when people estimate Iowa tax by hand:

• Adding local option tax to a car purchase. Vehicles pay the 5% fee for new registration, not sales tax plus LOST.
• Assuming the holiday covers anything under $100 in total. The limit is per article of clothing or footwear; a $100 item gets no exemption.
• Taxing salty snacks. Chips and pretzels are exempt food in Iowa unless they come from a vending machine or are sold as prepared food.
• Adding LOST to self-reported use tax. Only the state rate applies, because there is no local option use tax.
• Using the county’s rate for a city. LOST can differ between a city and the unincorporated county around it, so look up the street address.
• Forgetting hotel taxes are different. A hotel bill carries hotel and motel tax, not LOST, so it can exceed the ordinary sales tax rate.