Iowa New Sales Tax Collection Laws

On May 30, 2018, Iowa Governor Kim Reynolds signed Senate File 2417, an extensive state tax reform bill to improve the tax structure in Iowa. This legislation contains changes to Iowa income, corporate, sales and use, local option sales, hotel and motel, and vehicle rental excise taxes. This law modernizes and expands the types of businesses required to collect Iowa sales tax. Specifically, marketplaces and remote sellers that exceed certain sales or transaction thresholds must charge sales tax the same as Iowa main street businesses.

Like South Dakota, Iowa includes an exception for small sellers, which will require only retailers to collect Iowa sales tax if the retailer sells $100,000 or more in products and/or services or makes 200 or more separate sales transactions. Remote sellers that made retail sales of tangible personal property, services, or specified digital products into Iowa in calendar year 2018 that exceed the smaller seller exception should begin collecting Iowa sales tax on January 1, 2019.

The new fuel tax rates, provided in the table below, will be effective July 1, 2017.

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