Senator Segebart: Iowa Sales Tax Holiday nears

With summer vacation winding down, parents are thinking about sending their children back to school. The state of Iowa wants to help them get ready. This year Iowa’s annual sales tax holiday is scheduled for Friday, August 1 and Saturday, August 2.  The holiday removes the sales tax on a variety of back to school items such as clothes and footwear. The sale starts at 12:01 a.m., August 1 and runs through midnight, August 2.

Under the holiday, no sales tax, including local option sales tax, will be collected on sales of an article of clothing or footwear having a selling price less than $100.  The exemption does not apply in any way to the price of an item selling for $100 or more.  There are some guidelines under the sale:

  • Clothing is defined as any article of wearing apparel and typical footwear intended to be worn on or about the human body. This does not include watches, jewelry, handkerchiefs, sporting equipment, backpacks, buttons, cosmetics, hair bows, wallets, roller blades, footwear primarily designed for athletic activity or protective use.
  • Articles normally sold as a unit must continue to be sold together. A pair of shoes for $120 cannot be sold individually for $60 to obtain the exemption.
  • The total price of items advertised as “buy one, get one free” or “buy one, get one for a reduced price” cannot be averaged in order for both items to qualify for the exemption. The retailer may advertise and sell the items for 50 percent off would make them eligible.
  • Issuance of a rain check during the exemption period will not qualify an eligible item for the exemption if the item is actually sold and delivered after the exemption period.
  • Eligible layaway items will qualify for the exemption if the customer puts the merchandise on layaway, even if final payment and delivery is not made until after the holiday.
  • Eligible items purchased by mail order, catalog or Internet will be exempt if they are delivered during the holiday, or ordered and paid for during the exemption period, even if delivery is made after the holiday. There are several other states which also hold sales tax holidays. Those sales tax holidays range between two to seven days. Items in their sales tax holiday also vary. There are various states that include sports equipment, computers, school supplies and other instructional materials. Louisiana holds a hurricane preparedness sale along with a sale for firearms, ammunition and hunting supplies. There are many states which hold a sale for energy star products.
  • According to the most recent estimate provided by the Iowa Department of Revenue, taxpayers collectively saved an estimated $4.4 million due to the sales tax holiday. So mark the date on your calendar – and happy savings.
  • The Iowa Department of Revenue has a comprehensive list of items on its website establishing what is taxable or exempt in the event there are any questions. They have also provided additional details about the sale. The department’s information can be found here.