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 Administrative 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 701-215.18 for additional information.