Sales Tax and Reverse Sales Tax Calculator Iowa

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• 6%
• 7%

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Iowa – IA Sales Tax Calculator: User Guide

Iowa, a state famous for the landscape of rolling plains and cornfields, is located in the Midwestern United States. The state has a flourishing economy, a favorable business environment, and healthy economic growth, attracting numerous businesses and entrepreneurs throughout the year.

So if you are one of them, and mulling over to start, move, or expand your business in Iowa, you should educate yourself on how to deal with Iowa Sales Tax. To assist you with this, our experts have compiled a fantastic Iowa Sales Tax guide supported with the Iowa Sales Tax calculator.

This guide will give all the essential information about sales tax, which you can use to calculate Sales Tax, using our tool. So let's get started!

Iowa Sales Tax Facts:

• The sales tax rate charged on the state level in Iowa is 6%. On top of it, several cities and counties also levy local sales tax that ranges between 0% and 1%, depending on purchase location.
• Ankeny, Iowa, is among cities that charge the lowest possible combined sales tax rate of 6%.
• Altoona, Iowa, is among cities that charge the highest possible combined sales tax rate of 7%.
• The average combined sales tax rate in Iowa is 6.919%.
• Iowa Sales imposes sales on almost all tangible personal property. Moreover, unlike most states, Iowa levy sales tax on most services too.
• Prescription drugs and groceries are exempted from Sales Tax.
• Sales of vehicles subject to registration are exempt from Iowa sales tax. However, 5% of the one-time registration fee is applicable.
• The Sales Tax rate in Iowa is higher than 51.9% of US states.
• Goods for resale, improvement, or as raw materials by the individuals and companies can be exempted from Iowa sales tax using Iowa Sales Tax Exemption Form.
• Online and out-of-state purchases used in Iowa, which are not subjected to Iowa Sales Tax, are charged with Iowa Use Tax of 6%.
• Iowa is a destination-based sales tax state so that the sales tax rate would be applied according to the purchase location.
• Iowa State has a 2-days sales tax holiday on clothing during 7 to 8 of August every year.

How to calculate Sales Tax in Iowa?

Businesses and Sellers involved in the retail sale of all tangible personal property (with a few exceptions) as well as most services, as well as have Nexus in Iowa are required to register for Iowa Sales tax. They are required to collect, manage, and remit it to the Iowa Department of Revenue while staying in compliance with state laws and avoid penalties and interest.

The sales tax determined on four factors:

1. Nexus: It is a connection of business with a state. The business is only liable to pay taxes to the states with Nexus.
2. Out of State Seller's Eligibility: Out of State Seller is only required to register, collect, and remit the sales tax to the authorities in the state if it falls under the criteria provided by the state.
3. Location and Products or Services: The sales tax rate varies from product to product and location to location, so you must check the sales tax rate applicable to your product according to the product category, county, and city in Iowa.
4. Exemptions: Almost all goods are eligible for sales tax regulation—however, Groceries and Prescription Drugs, along with some other products that are exempted under Iowa Law. So you should check with the Iowa state government as to which goods and services sold in Iowa are subject to sales tax.

To calculate Sales Tax in Iowa, follow the steps below:

Step 1 – Determine your Nexus:

You, as a Business owner, are only required to collect sales tax if you are eligible for collecting sales tax and have Sales Tax Nexus in the Iowa State. And to determine your Nexus in Iowa, you must have any of the following:

• Maintaining a physical location in Iowa, such as office, warehouse, distribution house, retail store, or other business locations.
• A permeant or temporary employee or independent sales representative working for you in Iowa.
• Regularly delivering products in Iowa
• Seller Installs property it sold in Iowa
• A construction contractor performs a job in Iowa
• Having Economic Nexus

Step 2 – Determine the eligibility to collect sales tax as an out-of-state seller:

Out of State Seller is eligible to register, collect and remit sales tax under Iowa Law, if:

1. Have a Physical location like office or store in Iowa
2. A marketing Affiliate
3. Drop-shipping from a third-party seller
4. Having a temporary stall to sell products in trade shows, festivals, and fair booths.
5. A remotely working employee or who is a traveling sales representative.

Step 3 – Determine the Sales Tax Rate:

Once you have determined that your Nexus is with Iowa, next is to deduce the Sales Tax rate (State + County + City) applicable to your product, for which you can refer the tables below:

Step 4 – Calculate Sales Tax:

After determining the sales tax rate according to the location and type of purchases, it is easy to calculate the sales tax amount charged on the product and gross price (amount after tax) of a product.

Example # 1:

For instance, you sell a Gaming Mouse on your store in Allendorf, Iowa, having a net cost of $50. The amount of Sales Tax that you have to pay on the Gaming Mouse would be:

Manual Method:

Net Price (amount before Tax) of a Gaming Mouse: $50

Total Sales Tax rate: 0.00% (Allendorf) + 0.00% (Osceola County) + 6.00% (Iowa State) = 6.00%

Total Sales Tax amount = $50 x 6.00% = $3

Gross Price (Amount after Tax) = 50 + 3 = $53

So the Sales Tax amount charged on the Gaming Mouse would be $3, raising the gross cost of it to $53.

Using our Sales Tax Calculator:

All of the steps mentioned above can be skipped to get an instant result using our Sales Tax Calculator. All you need is:

1. Input the $50 Net Price of a Gaming Mouse as Amount Before Tax
2. Input or select 00% of the combined Sales Tax rate on the Tax Rate menu.

Our calculator will automatically calculate the result, and represents it in 3 different forms, as shown in the image below:

Reverse Sales Tax Calculation

In the example above, we have explained to you to calculate the Sales Tax amount payable in a product, and the Gross Price of the Product.

But there are also instances when you are required to deduce how much Sales tax you have actually paid on a product in Iowa.

This is where the Reverse Sales Tax Calculation Kicks in. And luckily, our Iowa Sales Tax Calculator can perform this calculation like a Pro.

Example:

The gross cost (amount after tax) of a Gaming Keyboard is $120, which you sell on your store in Alleman, Iowa. Now, if you want to deduce the amount of sales tax you have actually paid on it and the net cost (amount before tax) of a Gaming Keyboard, you can follow the steps below:

Gross Price (Amount after Tax) of Gaming Keyboard: $120

Total Sales Tax rate: 1.00% (Alleman) + 0.00% (Polk County) + 6.00% (Iowa State) = 7.00%

Manual Method:

Gross Price with sales tax = [Net Price × (tax rate in decimal form + 1)]

120 = [Net Price x ((7/100) + 1)]

120 = Net Price x 1.07

$112.2 = Net Price

So the original Price (net price) of the Gaming Keyboard would be $112.2.

Using our Sales Tax Calculator:

You can also use our Sales Tax Calculator for Reverse Sales Tax calculation to skip the aforementioned manual method. All you need is:

1. Input the $120 Gross Price of Gaming Laptop as Amount after Tax
2. Input or select 7.00% of combined Sales Tax Rate on the Tax Rate

Our calculator will automatically calculate the result and represents it in 3 different forms.

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