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Iowa Sales Tax Rate Increase to 6 Percent - July 1, 2008

Hotel and Motels
Construction Equipment
Short-term Automobile Rental
Vehicles

Sales of Certain Construction Equipment

Sales of the following are taxed at 5%. 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 

Short-term Automobile Rental

Sales tax changed from 5% to 6% on July 1, 2008.
Auto rental tax remains at 5%.
Local option sales tax (LOST), if any, still applies.
 
Auto rental tax applies to vehicles designed to carry nine or fewer passengers. It does not apply to delivery trucks designed to carry cargo or to motorcycles or motorized bicycles. Rental agreements are for a period of 60 days or less.
 

Vehicle Purchases and Leases

Vehicle Purchases

The rate on the purchase of vehicles subject to registration is 5%. It is imposed on the purchase price.

Vehicle Leases

The rate on motor vehicle leases is 5%. It is imposed on the lease price.

The vehicle must:

  • Be subject to registration, but not a motorcycle or motorized bicycle
  • Have a gross vehicle weight rating of less than 16,000 pounds
  • Be leased for a period of 12 months or more