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Iowa Sales Tax Guide for Businesses

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We wrote this guide for online sellers who want to know if they even have to bother with sales tax in Iowa, and if so, how best to tackle the sales tax situation in the Hawkeye State.

After reading this, you’ll know:

  • Do you or don’t you need to collect Iowa sales tax?
  • Which customers do you collect from?
  • How much do you collect?
  • What do you do with all the sales tax you’ve collected?
  • Way more than you probably ever wanted to know about Iowa sales tax!

Do you have sales tax nexus in Iowa?

Good news! You only have to begin thinking about Iowa sales tax if you have sales tax nexus in Iowa.

“Sales tax nexus” is just a fancy way of saying “significant presence” in a state.

Iowa considers a seller to have sales tax nexus in the state if you have any of the following in the state:

  • An office, warehouse, distribution house or place of business
  • An employee, contractor or other representative in Iowa, either temporarily or permanently
  • Installs property it sold in Iowa
  • A construction contractor performs a job in Iowa
  • Regularly engages in delivery of products to Iowa
  • Economic nexus (i.e. your sales or transactions into the state mean you are subject to the state’s economic nexus rule)

You can click here to read exactly what the Iowa Department of Revenue (Iowa’s taxing authority) has to say about what constitutes sales tax nexus in Iowa.

Do you have economic nexus in Iowa?

Effective January 1, 2019, Iowa considers vendors who make more than $100,000 in sales annually in the state in the previous or current calendar year to have economic nexus. This means the state considers these vendors obligated to collect sales tax from buyers in the state. You can read Iowa’s economic nexus guidance for businesses here and you can read more about economic nexus in every state here.

What about Iowa’s Retailer Use Tax?

Iowa’s Retailer’s Use Tax is a voluntary program for remote sellers who have not yet reached economic nexus requirements in Iowa. This means that if you’re under those thresholds, you do not have to register with the state, collect and remit sales tax. If you’ve already registered for the Iowa Retailer’s Use Tax and are under Iowa’s economic nexus requirements, then you can cancel your registration with the state if you’d like to (it’s a voluntary program). If you have met Iowa’s economic nexus requirements, the state requires that you register for a standard sales tax license. If this applies to you and you are already registered for a Retailer’s Use Tax license, you can cancel your registration and register with the state for a new sales tax permit.

Is what you’re selling even taxable?

You’ve probably read this far because you realized you have sales tax nexus in Iowa. Your next step is to determine if what you’re selling is even taxable.

Services in Iowa may be taxable. You can find a list of taxable services in Iowa here.

Tangible products are taxable in Iowa , with a few exceptions. These exceptions include certain foods and items used in agriculture or manufacturing. You can see a list of tax-exempt items in Iowa here.

If you have sales tax nexus in Iowa and your products are taxable, your next step is to register for a sales tax permit.

How to Register for a Sales Tax Permit in Iowa

Sellers with sales tax nexus in Iowa must apply for an Iowa sales tax permit.

Don’t skip this step! Many states consider it unlawful to collect sales tax in their name without a permit. Go here for more on how to register for a sales tax permit in Iowa.

How to Collect Sales Tax in Iowa

So you’ve determined that you have sales tax nexus in Iowa and what you’re selling is taxable. And you’re all set and registered for your Iowa sales tax permit.

The next step is to determine how much sales tax to collect.

Iowa is a destination-based sales tax state. If your business is based in Iowa, you would charge sales tax at the rate of your buyer’s ship-to location.

Example: You live and run your business in Iowa City, IA where the sales tax rate is the 6% state rate with no added local rates, but you sell to a customer in Dubuque, IA. The sales tax rate in Dubuque is made up of the 6% Iowa sales tax rate plus the 1% Dubuque County rate for a total of 7%. Since Iowa is a destination-based sales tax state you would charge your buyer the 7% sales tax rate due to where they are located.

However, if you’re not based in Iowa, but have sales tax nexus there, you’re considered a remote seller. You would need to collect the same sales tax as an in-state seller would. Additionally, the state rate is charged, plus local option sales tax (if delivery occurs in a local option jurisdiction).

You can look up your local sales tax rate by going to on your mobile device or look up any sales tax rate by zip code by going to with TaxJar’s Sales Tax Calculator.

Should you collect sales tax on shipping charges in Iowa?

As long as you separately state the shipping charges on your bill to your customer, you do not have to charge sales tax on shipping.

But if you include shipping in the price of the product you sell the customer, then shipping is considered part of the taxable transaction and Iowa declares that you must collect sales tax on shipping.

Read a full explanation of sales tax on shipping in Iowa here.

When are Iowa Sales Tax Returns Due?

When you file and pay Iowa sales tax depends on two things: your assigned filing frequency and your state’s due dates.

How often will you file sales tax returns in Iowa?

States assign you a filing frequency when you register for your sales tax permit. In most states, how often you file sales tax is based on the amount of sales tax you collect from buyers in the state.

In Iowa, you will be required to file and remit sales tax either monthly, quarterly or annually.

How often you are required to file sales tax in Iowa follows this general rule:

Iowa sales tax returns are generally due the 20th or the final day of the month following the reporting period. If the Iowa filing due date falls on a weekend or holiday, sales tax is due the next business day.

2021 Iowa Monthly Sales Tax Filing Due Dates

2021 Iowa Quarterly Sales Tax Filing Due Dates

2021 Iowa Annual Sales Tax Filing Due Dates

Click here for more info on Iowa sales tax filing due dates.

How to File Sales Tax in Iowa

When it comes time to file sales tax in Iowa you must do three things:

  1. Calculate how much sales tax you owe
  2. File a sales tax return
  3. Make a payment

We’ll walk you through these steps.

How to Calculate How Much Sales Tax You Owe in Iowa

Calculating how much sales tax you should remit to the state of Iowa is easy with TaxJar’s Iowa sales tax report.

All you do is connect the channels through which you sell – including Amazon, eBay, Shopify, Square and more – and we’ll calculate exactly how much sales tax you collected. All the information you need to file your Iowa sales tax return will be waiting for you in TaxJar. All you have to do is login!

How to File and Pay Sales Tax in Iowa

You have two options when it comes to filing sales tax in Iowa:

File online - File online at the Iowa Department of Revenue. You can remit your payment through their online system. AutoFile - AutoFile - Let TaxJar file your sales tax for you. We take care of the payments, too. You’ll never have to worry about spreadsheets, calculations or filling out complex sales tax returns.


  • Late Filing Penalty – 10% of tax due
  • Late Payment Penalty – 5% of tax due

Other penalties for fraud or serial offenses include higher penalties and even criminal charges.

And that’s it. You’ve mastered Iowa sales tax filing! Now that sales tax is out of the way, you can get back to what you do best – running your business.

Iowa Sales Tax Holidays

Here’s a list of current Iowa sales tax holidays:

Check here for more information about Iowa sales tax holidays, including how to handle sales tax holidays as an online seller.

Iowa Sales Tax Resources

For more about Iowa sales tax, check out the Iowa section of the TaxJar blog.

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