Iowa sales tax on invoices (2026 guide)

Iowa charges a 6% state sales and use tax. Most jurisdictions also have a 1% local option sales tax, so the rate you'll charge in much of the state is 7%.

The bigger surprise for service businesses is the taxable services list. Iowa only taxes the services its law names — but it names a lot of them, including photography, landscaping, many repairs and software as a service. If you're a freelancer or contractor in Iowa, check the list before you assume your work is tax-free.

Iowa sales tax rates

The local option tax is imposed by counties, cities or the unincorporated areas of a county that have voted for it. Where it applies, it's always 1%. On your Iowa return you report local option tax on a separate schedule — and the Department says everyone with a taxable amount must complete that schedule, even if no local option tax is due.

Which services are taxable in Iowa?

The Department's rule is: goods are taxable unless exempt, but services are taxable only when Iowa law specifies them. The official list is in Iowa Code section 423.2(6), and the Department's taxable services page lists about 75 of them. Ones that often apply to small businesses include:

• Photography and retouching services
• Landscaping, lawn care, and tree trimming and removal
• Janitorial and building maintenance or cleaning (nonresidential only)
• Carpentry repair and installation, electrical and electronic repair and installation, plumbing and pipe fitting
• Painting, papering, and interior decorating
• Vehicle repair, vehicle wash and wax, wrecker and towing
• Pet grooming, barber and beauty services, alteration and garment repair
• Security and detective services, extermination services
• Information services, software as a service, and services to install, maintain, repair or upgrade specified digital products
• Demolition, excavating and grading, swimming pool cleaning and maintenance, sign construction and installation

Services that aren't on the list — for example writing, legal and accounting work, and most consulting — aren't subject to Iowa sales tax. (Investment counseling is on the list, so it is taxable.) Iowa treats a few charges, such as printing and binding, engraving and equipment rental, as sales of goods, so they're taxable too.

Web developers and IT consultants: information services, software as a service and services related to specified digital products are on Iowa's list. Check the Department's guidance for how your particular work is treated.

Getting an Iowa sales tax permit

If you sell taxable goods or services in Iowa, you need an Iowa sales and use tax permit, which you get through the Department's Business Registration System. You need a separate permit for each location where you make taxable sales. Then you:

1. collect state and local option tax from customers,
2. file returns electronically through GovConnectIowa — monthly, quarterly or annually, depending on your tax liability, and
3. keep records for at least three years, including invoices and receipts.

Out-of-state sellers: a retailer with no physical presence in Iowa doesn't have to collect Iowa sales tax unless it has $100,000 or more in gross revenue from sales into Iowa in the current or prior calendar year.

What an Iowa sales tax invoice should show

• your business name and address,
• the customer's name and address,
• a unique invoice number and the invoice date,
• a description and price for each item or service,
• sales tax as a separate line, with the combined rate, and
• the total due.

If you include the tax in your price instead of adding it, the Department says a notice saying so must be posted or shown on the invoice. If one invoice mixes taxable and nontaxable services, put them on separate lines. In Invoice Native, tick Tax only on the taxable lines.

Resale and exemption certificates

A customer who claims an exemption — including a business buying to resell — gives you Form 31-014, Iowa Sales Tax Exemption Certificate. The Department says you must obtain it from purchasers claiming exemptions; keep it with your records as evidence of why you didn't charge tax.

For more on exempt customers, see how to invoice a tax-exempt customer.

A worked example

Suppose you're a photographer in Des Moines and you invoice a local business $1,200 for a product photo shoot. Photography is on Iowa's taxable services list. Assuming the location has the 1% local option tax, the combined rate is 6% + 1% = 7%:

• sales tax: $1,200 × 7% = $84.00
• invoice total: $1,284.00

On your return, $72.00 of that is state tax (6%) and $12.00 is local option tax (1%). In an area without the local option tax, you'd charge 6%, or $72.00.

Selling to customers in other states

Iowa sourcing rules generally tax a service where it's first used in Iowa, and goods where they're delivered in Iowa. If you ship goods or deliver taxable services to customers in another state, that state's rules may apply instead of Iowa's. Since the Supreme Court's 2018 decision in South Dakota v. Wayfair, states can require out-of-state sellers to register and collect their sales tax once sales into the state pass a threshold the state sets. If you sell across state lines regularly, check the thresholds and registration rules of each state you sell into — and use that state's rate on those invoices.

Common mistakes on Iowa invoices

• Assuming services are never taxed. Check the Department's taxable services list for your work.
• Taxing residential cleaning or garbage pickup. Janitorial and garbage services are taxable only when nonresidential.
• Forgetting the 1% local option tax where it applies.
• Skipping the local option schedule on your return.
• Charging tax on a sale covered by Form 31-014.

Quick checklist for Iowa invoices

• ✅ Iowa sales and use tax permit for each location
• ✅ Checked your services against Iowa's taxable services list
• ✅ 6% state rate plus 1% local option tax where it applies
• ✅ Taxable and nontaxable lines separated
• ✅ Form 31-014 on file for exempt sales; records kept at least three years