IA Iowa State sales tax rates
STATEWIDE SALES TAX RATE
ECONOMIC SALES THRESHOLD
Do you need to collect sales tax in Iowa?
You’ll need to collect sales tax in Iowa if you have nexus there. There are two ways that sellers can be tied to a state when it comes to nexus: physical or economic. Physical nexus means having enough tangible presence or activity in a state to merit paying sales tax in that state. Economic nexus means passing a states’ economic threshold for total revenue or the number of transactions in that state.
Do you have physical nexus in Iowa?
Iowa considers a seller to have physical nexus 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
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.
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 taxable?
Services in Iowa may be taxable. Tangible products are taxable in Iowa, with a few exceptions. These exceptions include certain foods and items used in agriculture or manufacturing.
Is SaaS taxable in Iowa?
SaaS is taxable, except when being used for business purposes, then it is exempt.
Collecting Sales Tax
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.
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).
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.
When are 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 filers 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.
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.