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Sales, Use & Excise Tax

Note to Businesses: When completing your sales tax return, qualifying exempt sales are included on line 1, Gross Sales, and also on line 4, Exemptions.  Be certain to enter these exempt sales in the Sales Tax Holiday category for line 4.

This yearly holiday is held the first Friday and Saturday of August.

Please Be Aware That...

  • Iowa Code section 423.3(68)(a)(2) states the sales tax holiday begins at 12:01 a.m. on the first Friday in August and ending at 12:00 am midnight the following day.
  • The holiday does not include Sunday.
  • Businesses that are open on these days are required to participate.
  • Businesses cannot advertise that they will pay or otherwise absorb the sales tax on items that don’t qualify.
  • When completing the tax return, list qualifying Sales Tax Holiday sales on the "exemptions" line.

If you sell clothing or footwear in the State of Iowa, this law may impact your business.

  • Exemption period: from 12:01 a.m. Friday through midnight Saturday.
  • No sales tax or local option sales tax will be collected on sales of an article of clothing or footwear having a selling price less than $100.00.
  • The exemption does not apply in any way to the price of an item selling for $100.00 or more
  • The exemption applies to each article priced under $100.00 regardless of how many items are sold on the same invoice to a customer

"Clothing" means...

  • any article of wearing apparel and typical footwear intended to be worn on or about the human body.

"Clothing" does not include...

  • watches, watchbands, jewelry, umbrellas, handkerchiefs, sporting equipment, skis, swim fins, roller blades, skates, and any special clothing or footwear designed primarily for athletic activity or protective use and not usually considered appropriate for everyday wear.