Iowa's 6% state rate is supplemented by a 1% local option sales tax in most counties and cities (nearly 90% of Iowa's population lives in a jurisdiction with the local option tax), pushing typical combined rates to 7%. Iowa exempts most grocery food and prescriptions, and offers an annual back-to-school clothing holiday.
Iowa sales tax overview
| Component | 2026 Rate |
|---|---|
| State sales tax | 6.00% |
| Avg local add-on | 0.940% |
| Avg combined | 6.94% |
| Maximum combined | 7.00% |
Iowa sales tax by city
Combined state + local sales tax rates for major cities in Iowa:
| City | Combined Rate |
|---|---|
| Des Moines | 7.00% |
| Cedar Rapids | 7.00% |
What's exempt in Iowa
Groceries
Exempt from Iowa state sales tax. Local jurisdictions may still tax.
Clothing & footwear
Taxed at standard rate.
Prescription drugs
Exempt from sales tax (typical across most states).
Iowa sales tax holidays
During a sales tax holiday, qualifying items are exempt from Iowa sales tax. Some local jurisdictions may opt out — check with retailers near you.
Back-to-School
1st Friday & Saturday of August
Clothing & footwear ≤$100
How Iowa sales tax is calculated
Sales tax in Iowa is calculated by multiplying the pre-tax purchase price by the applicable combined rate. The formula is simple:
Sales Tax = Purchase Price × 6.94% (avg combined)
Total = Purchase Price + Sales Tax
The exact rate depends on where the purchase occurs — the state base rate (6.00%) plus any local city or county add-ons. Iowa allows local jurisdictions to add their own taxes, so the rate varies by location.
Quick calculation examples at average rate 6.94%:
$100 item
$6.94 tax
$106.94 total
$250 item
$17.35 tax
$267.35 total
$500 item
$34.70 tax
$534.70 total
$1,000 item
$69.40 tax
$1069.40 total
Additional tax-free items in Iowa
Beyond the standard exemptions, Iowa also provides sales tax relief on these categories:
Exemptions may have conditions. Always verify with the Iowa Department of Revenue for complete rules.
Iowa sales tax in context: rates, history, and neighbors
Iowa's 6% state sales tax (since 2008) plus the 1% Local Option Sales Tax (LOST) — adopted by ~90% of Iowa cities and counties via voter referendum — gives a typical combined rate of 7%. Des Moines, Cedar Rapids, Davenport, Sioux City, and most other Iowa cities all charge 7%. Some rural areas charge only 6%. Iowa exempts groceries and prescriptions from sales tax. Iowa expanded its sales tax base in 2019 to cover digital goods, services, and various previously-exempt items. The annual back-to-school sales tax holiday (first Friday-Saturday of August) covers clothing/footwear under $100/item. Compared to neighbors: Illinois (~8.82% Chicago combined), Wisconsin (~5.44%), Minnesota (~8.05%), Nebraska (~6.95%), Missouri (~8.42%), South Dakota (~6.10%) — Iowa's 7% is in the middle of the Plains states range.
Online shopping & Iowa sales tax
Iowa adopted economic nexus effective January 2019 — out-of-state sellers with $100,000+ in Iowa sales must collect Iowa sales tax. Iowa is a member of the Streamlined Sales Tax (SST) Agreement. Marketplace facilitators collect Iowa tax on all third-party sales through their platforms since 2019.
Use Tax reminder: If you purchase taxable goods online from a seller who does NOT collect Iowa sales tax, you technically owe Use Tax — the same rate as sales tax, reportable on your Iowa state tax return. Use Tax enforcement on consumers is rare but the obligation exists for significant purchases.
How much Iowa sales tax on common purchases?
Using Iowa's average combined rate of 6.94%:
| Purchase | Price | Sales Tax | Total |
|---|---|---|---|
| Grocery cart | $150 | Exempt | $150.00 |
| Clothing / shoes | $120 | $8.33 | $128.33 |
| Prescription drug | $80 | Exempt | $80.00 |
| Smartphone | $999 | $69.33 | $1068.33 |
| Laptop / tablet | $1,299 | $90.15 | $1389.15 |
| New car ($35,000) | $35,000 | $2429.00 | $37429.00 |
| Home appliance | $1,500 | $104.10 | $1604.10 |
| Restaurant meal | $60 | $4.16 | $64.16 |
Based on Iowa's average combined rate of 6.94%. Exact tax depends on city/county. Use our calculator above for specific locations and amounts.
Collecting sales tax in Iowa: business guide
If you sell goods or taxable services to Iowa customers, here's what you need to know:
- Registration: Register for a Iowa sales tax permit/license through the Iowa Department of Revenue before making your first taxable sale. Most states process registrations online within a few days.
- Economic nexus (online sellers): If you have $100,000+ in Iowa annual sales or 200+ transactions, you must collect Iowa sales tax even without a physical presence in the state — per South Dakota v. Wayfair (2018). You must collect both state (6.00%) and applicable local rates.
- Destination vs origin sourcing: Iowa uses destination-based sourcing for most sales — the tax rate where the buyer receives the goods applies. Always use the customer's delivery address to determine the rate.
- Filing frequency: Frequency depends on your Iowa sales volume — monthly for high-volume sellers, quarterly or annually for low-volume sellers. Check with the Iowa Department of Revenue for your specific filing schedule.
- Marketplace sales: If you sell through Amazon, Etsy, eBay, or similar platforms, the marketplace is required to collect and remit Iowa sales tax on your behalf — you don't need to collect it separately on marketplace transactions.
- Resale certificates: Businesses purchasing goods for resale can provide a Iowa resale certificate to suppliers to avoid paying sales tax on wholesale purchases. Keep copies of all resale certificates for audits.
Streamlined Sales Tax (SST): Iowa is a full member of the Streamlined Sales Tax (SST) Agreement, which simplifies multi-state sales tax registration and compliance through a single registration portal (streamlinedsalestax.org).
Iowa-specific business compliance details
Iowa businesses register with the Iowa Department of Revenue at tax.iowa.gov for an Iowa Sales Tax Permit. Filing frequency: monthly for most businesses, quarterly for smaller, semi-monthly for very high volume. Out-of-state sellers with $100,000+ in Iowa sales (or 200+ transactions) must collect Iowa tax (economic nexus, since 2019). Iowa is a Streamlined Sales Tax (SST) Agreement member — multi-state compliance is simplified. Marketplace facilitators collect Iowa tax. Iowa uses destination-based sourcing. Iowa's broad digital goods taxation (since 2019) means SaaS, streaming, and software downloads sellers must register and collect. Penalties: 5% per month (capped at 25%) plus interest. The LOST local tax is administered through state filing — businesses don't file separately with cities.
Iowa sales tax frequently asked questions
What is Iowa's Local Option Sales Tax (LOST) and who charges it?
Iowa's Local Option Sales Tax (LOST) is an optional 1% sales tax that cities and counties can adopt by voter referendum. As of 2026, nearly 90% of Iowa's population lives in a jurisdiction with LOST, making the effective rate 7% in most areas. Cities must vote to adopt it, and proceeds go to local governments for property tax relief, infrastructure, and services. Des Moines and Cedar Rapids both charge 7%.
When is Iowa's back-to-school sales tax holiday?
Iowa's Back-to-School Sales Tax Holiday takes place on the first Friday and Saturday of August. Clothing and footwear priced $100 or less per item are exempt from Iowa sales tax. This exemption applies to both state (6%) and local option (1%) taxes in participating jurisdictions. Iowa's holiday is one of the more focused — only clothing qualifies, not school supplies or electronics.
Are streaming services like Netflix taxable in Iowa?
Yes — Iowa taxes most digital goods and services including streaming video (Netflix, Disney+), streaming audio (Spotify, Apple Music), video game downloads, and e-books at the standard 6% rate (plus local option tax where applicable). Iowa expanded digital goods taxation in 2019 and takes a broad approach to ensuring digital equivalents of physical goods are taxed.