Sales Tax Treatment of Computers and Computer Peripherals

Since 1985, Iowa law has allowed an exemption from sales tax for “[c]omputers used in processing or storage of data or information by an insurance company, financial institution, or commercial enterprise.” Following the work of the Taxation and Exemption of Computers Task Force, the 2020 legislature defined “computer peripheral” in Iowa Code section 423.1 and added that term to the exemption in Iowa Code section 423.3(47).

Iowa Code section 423.1 defines “computer” and “computer peripheral” as follows:

  • “Computer” means an electronic device that accepts information in digital or similar form and manipulates the information for a result based on a sequence of instructions.
  • “Computer peripheral” means an ancillary device connected to the computer digitally, by cable, or by other medium, used to put information into or get information out of a computer.

The Department is providing the following non-exhaustive lists of devices as guidance for taxpayers so they know whether certain devices are taxable or exempt as a computer or computer peripheral. Determination of the taxability of some devices may require a fact-intensive analysis best suited for audit or examination by the Department. See Iowa Administrative Code rule 701-230.18 for additional information.

  • The following are exempt as a computer or computer peripheral if used in processing or storage of data or information by an insurance company, financial institution, or commercial enterprise:

    • Desktop computers or towers
    • Laptops
    • Keyboard
    • Mouse
    • Monitors
    • Hard drives
    • Multi-functional devices
    • Printers
    • Scanners
    • Toughbooks
    • Smartphones (phones with internet capabilities)
    • Tablets
    • Docking stations
    • Port replicators
    • USB hubs
    • Discriminators
    • Flash drives
    • Thin clients
    • Zero clients
    • Wireless access points
    • Routers
    • Modems
    • Hotspots
    • Smart TVs
    • Servers
    • DVRs
    • Webcams
    • Adapters
    • Firewall hardware
    • Digital displays or billboards
    • Hardware maintenance agreements
    • Computerized phone systems
    • Cell phones not including smartphones
    • Time clocks
    • Postage meters
    • Cables
    • Switches or switching equipment
    • Surveillance or security cameras
    • Uninterruptible power supplies
    • Power strips or surge protectors
    • Computer cases
    • Fluke meters
    • Testing equipment
    • Replacement parts
    • Pill counters or sorters
    • Satellite or cable television equipment
  • The Department will accept refund claims for sales and use tax paid on exempt computers and computer peripherals if the refund claim is within the statute of limitations and has not previously been denied by the Department. Refund claims should be submitted by completing this form along with any required supporting documentation.


Source URL: https://tax.iowa.gov/computers-and-computer-peripherals