The sales tax rate in Linn County, Iowa is 7%: the 6% Iowa state sales tax plus a 1% local option sales tax that county voters have approved. That combined rate applies the same way in Cedar Rapids, Marion, Hiawatha, and the unincorporated rural areas, so the sticker you see at checkout doesn’t change as you move around the county.
How the 7% Breaks Down
Iowa law sets the 6% state sales tax, and Iowa Code Chapter 423B lets counties and cities add a 1% local option sales tax (LOST) when a majority of voters approve it.1Iowa Legislature. Iowa Code 423B.1 – Authorization – Election – Imposition and Repeal Linn County voters did that, and in November 2021 they extended the LOST for another ten years, through 2034.2Linn County, Iowa. Local Option Sales Tax Referendum The 1% isn’t optional at the register. If a sale is taxable, both the state and local pieces apply.3Iowa Department of Revenue. Sales and Use Tax Guide
What the 7% Applies To
Most physical goods are taxable: clothing, electronics, furniture, appliances, and the rest of what you’d find on a store shelf. Iowa also taxes a long list of services. Vehicle repair, appliance repair, and similar maintenance work all carry the full 7% on the service charge.4Iowa Department of Revenue. Iowa Sales and Use Tax – Taxable Services Equipment rentals and leases work the same way. When a contractor does repair work, the whole bill is taxable whether labor and parts are listed separately or lumped together.5Legal Information Institute. Iowa Admin Code r 701-219.13 – Tax on Enumerated Services
Digital Products and Subscriptions
Since January 1, 2019, Iowa has taxed digital products delivered electronically. That covers movies, music, e-books, digital images, video games, and computer software applications. Prewritten and custom software are both taxable whether you download the file or run it in a browser.6Iowa Department of Revenue. Taxation of Specified Digital Products, Software, and Related Services
Software-as-a-service is in the same bucket. Cloud-hosted applications you access over the internet are taxable, and so are streaming video services, video game subscriptions, in-game currency purchases, online database access, and even tournament entry fees. Installation, maintenance, and upgrade services tied to digital products are also taxed.6Iowa Department of Revenue. Taxation of Specified Digital Products, Software, and Related Services This is a common spot for underpayment, especially on subscriptions billed by out-of-state companies that don’t always add Iowa tax to the invoice.
What’s Exempt
Groceries
Food and food ingredients sold for home preparation are exempt from both the state and local tax. Bread, meat, produce, dairy, eggs, frozen foods, cereals, coffee, tea, and spices all qualify.7Iowa Department of Revenue. Iowa Sales Tax on Food The exemption does not reach prepared food, candy, soft drinks, dietary supplements, alcohol, or vending machine food.8Iowa Legislature. Iowa Code 423.3 – Exemptions A takeout dinner is taxed. The raw chicken you cook at home is not.
Prescription Drugs and Medical Equipment
Prescription drugs, durable medical equipment, mobility-enhancing equipment, prosthetic devices, and other medical supplies for human use are exempt under Iowa Code 423.3(60). Durable medical equipment has to be prescribed, serve a primary medical purpose, and be for home use. Ostomy supplies, diabetic testing materials, syringes, and catheters are exempt whether or not a prescription is required.8Iowa Legislature. Iowa Code 423.3 – Exemptions
Farm Inputs
Farm chemicals, fertilizer, herbicides, pesticides, seeds, livestock feed and medication, and agricultural drain tile are exempt when used directly in agricultural production. Farm machinery and equipment also qualify if the equipment is primarily used in producing agricultural products and is either self-propelled or customarily attached to self-propelled equipment.8Iowa Legislature. Iowa Code 423.3 – Exemptions
August Sales Tax Holiday
Iowa runs a back-to-school sales tax holiday on the first Friday and Saturday of August each year. In 2026 that falls on August 7 and 8. During that window, clothing and footwear priced under $100 per item are exempt from both state and local tax.9Iowa Department of Revenue. Iowa’s Annual Sales Tax Holiday Only general-use clothing counts. Cleated or spiked shoes, protective equipment, and accessories like jewelry and handbags are still taxed. If an item is priced at $100 or more, the whole price is taxable, not just the amount above the threshold.8Iowa Legislature. Iowa Code 423.3 – Exemptions
Use Tax on Out-of-State Purchases
If you buy something from a seller that doesn’t collect Iowa tax and you use the item in Linn County, you owe use tax at the same 7% rate. This comes up with online purchases from smaller retailers, items picked up on trips out of state, and goods shipped from private sellers.
Owe $1,200 or more in use tax in a year and you have to register for a sales and use tax permit and report it on regular returns. Owe less than that and you can file a Non-Permit Use Tax Return instead.3Iowa Department of Revenue. Sales and Use Tax Guide
Hotels and Short-Term Lodging
Lodging is its own stack. A hotel or motel stay in Linn County carries the 6% state sales tax, any applicable local option tax, a 5% state hotel and motel excise tax, and a local hotel and motel tax of up to 7%. If the same guest stays more than 90 consecutive days, the hotel and motel tax drops off starting on the 91st day. The first 90 days stay taxable and the tax on them isn’t refundable, even if the stay runs longer.10Iowa Department of Revenue. Iowa Hotel and Motel Tax
If You’re Selling in Linn County
Any business making taxable sales in Linn County needs a sales tax permit from the Iowa Department of Revenue. The fastest route is GovConnectIowa, the state’s online portal for registration, filing, and payments.11Iowa Department of Revenue. Business Permit Registration
Out-of-state sellers who hit $100,000 or more in gross revenue from Iowa sales in the current or previous calendar year have to collect both the 6% state tax and the 1% Linn County LOST. Gross revenue for that threshold includes all sales delivered into Iowa, taxable or not. Marketplace facilitators like Amazon, eBay, and Etsy carry the collection responsibility once they cross the same threshold, and Iowa doesn’t let the facilitator and seller agree to swap that duty. A small seller moving goods only through a qualifying marketplace generally doesn’t need a separate Iowa permit.12Iowa Department of Revenue. Remote Sellers and Marketplace Facilitators
How Often You File
Iowa uses two filing frequencies. Businesses collecting $1,200 or more in sales and use tax per year file monthly, with returns due by the last day of the following month. Businesses collecting less than $1,200 per year file annually, due January 31 of the following year. A seasonal option exists for businesses that cross $1,200 but only operate four or fewer months a year.13Iowa Department of Revenue. Filing Frequency and Return Due Dates Iowa dropped quarterly filing in 2022, so older guidance that mentions quarterly returns is out of date.
Penalties for Late Filing
Missing a filing deadline triggers a 5% penalty on the unpaid tax. Failing to pay reported tax on time adds a separate 5% penalty, and the two can stack.14Iowa Legislature. Iowa Code 421.27 – Penalties Delinquent balances also accrue interest at 10% per year for 2026, roughly 0.8% per month.15Iowa Department of Revenue. Penalties and Interest Rates Willful failure to file, or filing a false return to evade tax, carries a 75% penalty on the unpaid amount.