Free guide for contractors
Do contractors charge sales tax in Iowa?
General information, not tax advice. Tax rules change and depend on the details of each job. Confirm how they apply to your business with your accountant or the state's revenue department before relying on them.
IA Iowa
Depends on the jobIt depends on the job. Iowa exempts labor on new construction and remodeling, but taxes repairs, installations and services such as landscaping.
Iowa contractors are generally the final consumers of building materials, supplies and equipment, and pay tax when buying them. Labor that would otherwise be taxable is exempt on new construction, reconstruction, alteration, expansion and remodeling of buildings.
Taxable labor stays taxable in all other cases, such as repairs and installations. Iowa's list of taxable services includes carpentry, electrical, plumbing, roof, shingle and glass repair, excavating, painting, landscaping, lawn care, tree trimming, extermination, and non-residential janitorial and building cleaning.
On a repair job, if the invoice is not itemized, the whole amount is taxed.
The state rate is 6%, plus a 1% local option sales tax where it has been adopted.
It turns on: whether the work is new construction, reconstruction, alteration, expansion or remodeling, or a repair or installation; whether the work is a listed taxable service, such as landscaping or extermination; on a repair, whether the invoice is itemized.
Watch out for
- Some jobs for specific organizations and entities may be exempt, but most nonprofits, including churches, are not (Iowa Contractors Guide).
“Taxable labor charges remain subject to sales tax in all other instances, such as repairs and installations.”Iowa DOR, Iowa Contractors Guide