Back to School Shopping? Make it Tax Free In Iowa

Iowa’s sales-tax holiday is this next weekend, Friday, August 4th through Saturday, August 5th. During that time, you can avoid paying the state sales tax of 6%, as well as any local tax, when you buy qualified clothing items. That can drop 7% off your back-to-school shopping bill. Iowa’s tax-free holiday includes clothing only.

The tax holiday encompasses clothing items priced at less than $100 each. If an item is more than $100, sales tax will be charged on the entire amount. The waived sales tax applies to any items under $100 that you purchase, with no limit on the number of items you can buy, only on the individual items price point. Clothing is defined as any article of apparel and typical footwear intended to be worn on or about the human body. It also includes diapers, so families may want to take this opportunity to stock up.

That being said, the tax holiday does NOT include watches, watchbands, jewelry, umbrellas, handkerchiefs, sporting equipment, skis, swim fins, roller blades, skates, or any special clothing or footwear designed primarily for athletic activity, protective use, or not considered appropriate for everyday wear.

For those of you across the bridge in Illinois, your state does not currently have any scheduled sales tax holidays. In addition, there is some bad news for those of you in Wisconsin as well. The state of Wisconsin will not be having a sales tax holiday or tax free weekend in 2023. All back to school purchases during July and August will be subject to the normal combined state + county + city sales tax rate. In most areas, the total sales tax is between 5% and 5.6%. August 4th & 5th is your only chance to swing into Iowa and save on some back to school (or work) clothing and shoes.

By the way, this tax-free holiday also applies to online purchases, as long as you place your order during the tax-free holiday. There are also a few other tips and tricks to know for the tax holiday. For example, manufacturer coupons (from the brand) do not reduce the price of the item for the purpose of waived sales tax. For example, if something costs $101 and the coupon would reduce it by $10, you still have to pay sales tax on that item despite it now being "under" $100. That being said, in-store discounts can be used to drop your item under $100 and then it would qualify for the tax-free break. And did you know that you can avoid taxes on layaway items as long as you put the merchandise on layaway during that tax-free period (maybe get some birthday / Christmas shopping done too). Any and all other information can be found here through the State of Iowa website.