Does Iowa charge sales tax on services?
by December 21, 2023
Please note: This blog was originally published in 2022. It’s since been updated for accuracy and comprehensiveness.
The majority of U.S. states require merchants to charge sales tax on tangible personal property (TPP), otherwise known as physical goods. Many states also implement sales and use tax on digital goods and SaaS (though keep in mind that Iowa has a unique SaaS sales tax exemption for commercial enterprises). Because the economy has shifted over time from a manufacturing economy to a service economy, states are now looking to generate revenue by taxing services.
Here’s what merchants need to know about taxing services in the state of Iowa.
What are the taxable services in Iowa?
Many services in Iowa are taxable, with more details available here:
- Aircraft lease or rental, 60 days or less
- Aircraft repair, remodeling, or maintenance, except when used in a scheduled or nonscheduled interstate FAA certified air carrier operation
- Alteration and garment repair
- Armored car services
- Bank and financial institution service charges
- Barber and beauty services
- Battery, tire, and allied services
- Boat repair
- Camera repair
- Campgrounds
- Carpentry repair and installation
- Carpet, rug, and upholstery cleaning and repair
- Communication services, excluding Internet access fees
- Dance school and dance studio
- Dating services
- Demolition
- Dry cleaning, pressing, dyeing, and laundering excluding the use of self-pay washers and dryers
- Electrical and electronic repair and installation
- Employment and executive search agencies
- Engraving
- Equipment and tangible personal property rental
- Excavating and grading
- Extermination services
- Farm implement repair of all kinds
- Flying service and instruction
- Furniture repair and cleaning
- Fur storage and repair
- Garbage collection and disposal, nonresidential commercial only
- Golf and country clubs and all commercial recreation fees, dues, and charges
- Gun repair
- House and building moving
- Household appliance, television, and radio repair
- Investment counseling
- Information services
- Janitorial and building maintenance or cleaning (non-residential only)
- Jewelry and watch repair
- Landscaping, lawn care, and tree trimming and removal
- Machine operator fees
- Machine repair of all kinds
- Massages, unless performed by a licensed massage therapist
- Mini-storage
- Motor repair
- Motor vehicle, recreational vehicle, and recreational boat rental (when rented without a driver or operator)
- Motorcycle, scooter, and bicycle repair
- Oilers and lubricators on vehicles and machines
- Office and business machine repair
- Optional warranty contracts
- Painting, papering, and interior decorating
- Parking facilities
- Pay television, including but not limited to streaming video, video on-demand, and pay-per-view
- Personal transportation service
- Pet grooming
- Photography
- Pipe fitting
- Plumbing, including drain cleaning and unplugging toilets, sinks, and sewers
- Prepaid calling services and prepaid wireless calling services
- Printing and binding
- Recapping and retreading tires
- Reflexology
- Retouching photographs
- Roof, shingle, and glass repair
- Security and detective services
- Sewage services, nonresidential commercial only
- Sewing and stitching
- Shoe repair and shoeshine
- Sign construction and installation
- Services arising from or related to installing, maintaining, servicing, repairing, operating, upgrading, or enhancing specified digital products
- Software as a service
- Storage warehouse or lockers of raw agricultural products
- Storage of household goods
- Storage of tangible or electronic files, documents, or other records
- Swimming pool cleaning and maintenance
- Tanning beds or tanning salons
- Taxidermy
- Telecommunication services, excluding Internet access fees
- Telephone answering service and telephone services
- Test laboratories, excluding tests on humans and animals and environmental testing
- Tin and sheet metal repair
- Tree trimming and removal
- Turkish baths and reducing salons
- Vehicle repair
- Vehicle wash and wax
- Video game services and tournaments
- Vulcanizing
- Water conditioning and softening
- Weighing
- Welding
- Well drilling (repair only)
- Wood preparation (for example, stripping, cleaning, sealing)
- Wrapping, packing, and packaging of merchandise other than processed meat, fish, fowl, and vegetables
- Wrecker and towing
Please keep in mind that this is a guideline, and you should consult with a sales tax professional to determine if the services your business provides should be subject to state sales tax. For an in-depth look at Iowa sales tax, TaxJar’s guide to sales tax in Iowa and the Iowa Department of Revenue has more details.
How to stay compliant with sales tax when you sell services
Managing all the moving parts of sales tax can be challenging. Are accounting services taxed? What about hair care or car maintenance? They may not be taxed in your state today, but sales tax laws change all the time. TaxJar makes it easier for you to stay current with it all, especially as you scale your business across states.
If you need to charge sales tax on services, TaxJar takes all of these state laws into account and makes your job simple. To learn more about TaxJar and get started automating your sales tax compliance, start a free, 30-day trial today.
