Iowa Enacts Sales Tax Reform

Iowa tax reform makes changes to sales tax economic nexus and other sales and excise tax rules.

Transaction Threshold for Economic Nexus

The tax reform bill repeals the 200 or more transactions threshold for remote sellers. Economic nexus in Iowa will be longer be limited based on the number of sales into Iowa.

Full Sales Tax on Option Service/ Warranty Contracts for Software

The full sales price of optional service or warranty contracts for computer software maintenance or support services will be subject to sales tax. Previously, sales tax applied to one half of the sales price.

Other Sales and Excise Tax Amendments

  • grain bins are exempt from sales tax;
  • a task force is created to examine the taxation and exemption of computers; and
  • various changes to automobile rental excise tax.

Iowa Gov. Kim Reynolds signed the tax reform legislation on May 3, 2019.

H.F. 779, Laws 2019, effective July 1, 2019 unless otherwise noted in legislation

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