Effective July 1, 2008, Iowa's sales and use tax rate will change from 5 to 6 percent.
In addition, Iowa's school local option (SILO) sales tax will be discontinued. "Regular" local option sales tax (LOST) will continue where applicable.
The state rate for the following will remain at 5 percent:
HOTELS, MOTELS AND SIMILAR BUSINESSES
The state rate for hotel and motel lodging will remain at 5 percent. The hotel/motel tax, if any, will still apply. The local option tax (LOST) does not apply, whether or not the rental is subject to hotel/motel tax.
SALES OF CERTAIN CONSTRUCTION EQUIPMENT
Sales of the following remain at 5 percent. In addition, they are not subject to local option tax.
- self-propelled building equipment
- pile drivers
- motorized scaffolding
- attachments customarily drawn or attached to them, including
- auxiliary attachments which improve their performance, safety, operation, or efficiency
- replacement parts
In addition, please be aware of the following:
SHORT-TERM AUTOMOBILE RENTAL
Sales tax will be 6 percent beginning July 1, 2008. Auto rental tax will remain at 5 percent. Local option sales tax (LOST), if any, still applies.
ENERGY: metered gas, electricity, and fuel, including propane and heating oil
Residential dwellings, apartment units and condominiums:
- not subject to the state sales tax rate
- subject to local option sales tax (LOST), if any
- unless the residence is located in a jurisdiction imposing a franchise fee
Non-Residential:
- subject to the state sales tax rate of 6%
- subject to local option sales tax (LOST), if any
- unless located in a jurisdiction imposing a franchise fee
VEHICLES
Vehicle Purchases: The rate on the purchase of vehicles subject to registration remains at 5 percent. It is imposed on the purchase price.
Vehicle Leases: The motor vehicle lease tax remains at 5 percent. It is imposed on the lease price.
BOATS, SNOWMOBILES, ATVs
An Iowa resident who purchases and takes possession of a boat, snowmobile, or ATV in another state for use in Iowa will pay the appropriate county treasurer 6 percent use tax on the selling price.
Sales of boats between individuals will continue to be taxed. The sales tax will be 6 percent of the selling price for everyone at all locations in Iowa. Local option tax, if any, also applies if possession of the boat is taken in an area that has the "regular" local option sales tax.
QUESTIONS
Online information is at www.state.ia.us/tax
To contact Iowa Department of Revenue tax specialists, call 1-800-367-3388 or e-mail idr@iowa.gov.