Does Iowa Charge Sales Tax on Services?

by TaxJar December 21, 2022

The majority of U.S. states require merchants to charge sales tax on tangible personal property (TPP), otherwise known as physical goods. Many states also implement sales and use tax on digital goods and SaaS (though keep in mind that Iowa has a unique SaaS sales tax exemption for commercial enterprises). Because the economy has shifted over time from a manufacturing economy to a service economy, states are now looking to generate revenue by taxing services.

Here’s what merchants need to know about taxing services in the state of Iowa.

What are the taxable services in Iowa?

Many services in Iowa are taxable, with more details available here:

Aircraft lease or rental, 60 days or less
Aircraft repair, remodeling, or maintenance, except when used in a scheduled or nonscheduled interstate FAA certified air carrier operation
Alteration and garment repair
Armored car services
Bank and financial institution service charges
Barber and beauty services
Battery, tire, and allied services
Boat repair
Camera repair
Campgrounds
Carpentry repair and installation
Carpet, rug, and upholstery cleaning and repair
Communication services, excluding Internet access fees
Dance school and dance studio
Dating services
Demolition
Dry cleaning, pressing, dyeing, and laundering excluding the use of self-pay washers and dryers
Electrical and electronic repair and installation
Employment and executive search agencies
Engraving
Equipment and tangible personal property rental
Excavating and grading
Extermination services
Farm implement repair of all kinds
Flying service and instruction
Furniture repair and cleaning
Fur storage and repair
Garbage collection and disposal, nonresidential commercial only
Golf and country clubs and all commercial recreation fees, dues, and charges
Gun repair
House and building moving
Household appliance, television, and radio repair
Investment counseling
Information services
Janitorial and building maintenance or cleaning (non-residential only)
Jewelry and watch repair
Landscaping, lawn care, and tree trimming and removal
Machine operator fees
Machine repair of all kinds
Massages, unless performed by a licensed massage therapist
Mini-storage
Motor repair
Motor vehicle, recreational vehicle, and recreational boat rental (when rented without a driver or operator)
Motorcycle, scooter, and bicycle repair
Oilers and lubricators on vehicles and machines
Office and business machine repair
Optional warranty contracts
Painting, papering, and interior decorating
Parking facilities
Pay television, including but not limited to streaming video, video on-demand, and pay-per-view
Personal transportation service
Pet grooming
Photography
Pipe fitting
Plumbing, including drain cleaning and unplugging toilets, sinks, and sewers
Prepaid calling services and prepaid wireless calling services
Printing and binding
Recapping and retreading tires
Reflexology
Retouching photographs
Roof, shingle, and glass repair
Security and detective services
Sewage services, nonresidential commercial only
Sewing and stitching
Shoe repair and shoeshine
Sign construction and installation
Services arising from or related to installing, maintaining, servicing, repairing, operating, upgrading, or enhancing specified digital products
Software as a service
Storage warehouse or lockers of raw agricultural products
Storage of household goods
Storage of tangible or electronic files, documents, or other records
Swimming pool cleaning and maintenance
Tanning beds or tanning salons
Taxidermy
Telecommunication services, excluding Internet access fees
Telephone answering service and telephone services
Test laboratories, excluding tests on humans and animals and environmental testing
Tin and sheet metal repair
Tree trimming and removal
Turkish baths and reducing salons
Vehicle repair
Vehicle wash and wax
Video game services and tournaments
Vulcanizing
Water conditioning and softening
Weighing
Welding
Well drilling (repair only)
Wood preparation (for example, stripping, cleaning, sealing)
Wrapping, packing, and packaging of merchandise other than processed meat, fish, fowl, and vegetables
Wrecker and towing

Please keep in mind that this is a guideline, and you should consult with a sales tax professional to determine if the services your business provides should be subject to state sales tax. For an in-depth look at Iowa sales tax, TaxJar’s guide to sales tax in Iowa and the Iowa Department of Revenue has more details.