Motor carrier taxes - Iowa

Sales & use taxes

Iowa imposes a sales tax on the sales price of the sale of tangible personal property or taxable services at the time the sale takes place. Use tax is most often imposed after the sale takes place and only on goods and services on which sales tax was not collected.

If possession of tangible personal property is taken in another state and tax has already been paid to the other state, no additional tax is due as long as the tax paid was the same or greater than the Iowa tax rate. If the tax is less, the purchaser must pay the difference to Iowa.

Services performed on property delivered into interstate commerce and tangible personal property delivered into interstate commerce is exempt to sales tax under certain circumstances. Clear diesel, motor fuel, and special fuel are exempt from sales tax if the fuel is consumed for highway use, the Iowa fuel tax has been imposed and paid, and no refund or credit of fuel tax has been made or will be allowed.

Purchases of vehicles, trailers, and semitrailers are not subject to a use tax provided that the vehicle is used in interstate commerce, accrues at least 25 percent of its mileage outside of Iowa, and is registered for a gross weight of 13 tons or more.