Get your tax IDs in Iowa

An EIN, if you need one, takes minutes online. Iowa then adds a sales tax permit if you sell taxable goods, withholding if you pay wages, and an unemployment account once you owe the tax. Income tax follows the entity you picked.

What’s different in Iowa

• State sales tax is 6%, and the local add-on is not statewide. It is 1% where a city or a county has adopted it. There is no local option use tax³.
• Groceries are generally exempt. Candy, soft drinks, and prepared food are the exceptions to read before you charge tax.
• Individuals pay a flat 3.8%⁶ in 2026. A C corporation still has two rates.
• Unemployment can start with any wages in a quarter. The employee does not pay it. The 2026 wage base is much lower than the 2025 figure printed in the same handbook.
• New-hire reports include contractors in a second rule. A willful failure to report is punishable as contempt.¹³

Do this

1. Get an EIN from the IRS if you need one. It is free and, if approved, issued immediately¹⁵ online. Withholding registration asks for a federal employer identification number. Don’t pay a website to apply for you.
2. Register in GovConnectIowa for the taxes that apply. The same system covers sales and use tax and income tax withholding, among others. Most permits are free. A sales tax permit itself is free. You may collect as soon as you register. A letter can arrive in as early as one business day. Allow up to 6 weeks for the mailed letter.¹ A sales tax permit is a license to collect tax. It is not a license to buy tax-free.²
3. If you sell taxable goods or taxable services in Iowa, get a sales permit and look up the place of the sale. The state piece is 6%. Inside one county, some cities have the local option tax and some do not. The unincorporated area may differ too. There is no local option use tax. A jurisdiction may start the local tax on January 1 or July 1. Use the department’s local-option list for the address, not a guess from a nearby city. Each location that makes taxable sales needs its own permit³.
4. File sales tax on the schedule the amount puts you on. If you will collect less than $1,200, the return is annual, due January 31 for tax collected the prior year. If you will collect $1,200 or more, it is monthly, due on the last day of the month after the month you collected the tax⁵. Local option tax is not counted in the amount that sets monthly or annual filing. File a zero return when you have no sales or taxable purchases to report. If the due date is a Saturday, Sunday, or holiday defined in Iowa Code 421.9A, it moves to the next day that is not one of those³.
5. If you sell into Iowa from outside the state, read the nexus line before you collect anything. A retailer with no physical presence does not have to collect Iowa sales tax until it has $100,000³ or more of gross revenue from sales into Iowa in the current or prior calendar year. Under that line, the buyer can still owe use tax. Read the permit questions if a marketplace is already collecting.
6. Register for withholding when you pay wages for work in Iowa. Withholding applies to wages paid to an Iowa resident, or to a nonresident working in Iowa. The return is due the last day of the month after the quarter. You remit quarterly if you withhold less than $6,000 a year and no more than $500 in any month. Above $500 in a month, and not more than $5,000 in a semimonthly period, the deposit is monthly. Above $5,000⁹ in a semimonthly period, deposits are semimonthly. The hiring guide covers the federal side.
7. Open an unemployment account when you are liable, and report new hires. The tests are in the unemployment section. Reports are due the last day of the month after the calendar quarter¹². New employees go to the centralized employee registry within 15¹³ days.

Rates and income tax

State sales and use tax is 6%. Local option sales tax, where it exists, is 1%. There is no local option use tax³.

Food and food ingredients are exempt, with exceptions. The exempt list does not cover food that is taxable as prepared food. Candy and soft drinks are taxable. Food that is prepared food can be taxable too.⁴ The food guide is a list with exceptions, not a one-line rule. Read it for the item you sell.

Individual income tax, for owners who report the business on their own return, is 3.8%⁶ of taxable income in 2026. The statute states the same rate as three and eight-tenths percent of taxable income. The tax is not imposed when net income is $13,500 or less for a joint return, a head of household, or a surviving spouse, or $9,000 or less for everyone else. If the tax would push net income under those amounts, the tax is reduced so the person keeps that net income. The statute tells you what to add back before you measure net income.⁷ File by the last day of the fourth month after the tax year ends⁵. This page does not compute your tax.

A C corporation pays 5.5% on the first $100,000 and 7.1% on income over that. The descriptions page labels those rates as the 2024 through 2027 tax rate. The same page says rates can fall, down to a flat 5.5%, if net corporate receipts for a year exceed $700,000,000. File by the last day of the fourth month after the tax year ends⁵.

A partnership or multi-member LLC files IA 1065. An S corporation files IA 1120S⁸. Those returns are due the last day of the fourth month after the tax year ends⁵. The pass-through page does not say whether Iowa requires its own S election on top of federal Form 2553¹⁶.* Ask a CPA if you are making the election. This page does not pick it for you. Entity and tax election separates the two.

Nonresident owners: A pass-through entity remits composite tax on its nonresident members' Iowa-source income. 3.8% for 2025 or later, for a nonresident estate, trust, S corporation, partnership, or individual. A nonresident C corporation uses the corporate rates, listed as 7.1% for 2024 or later.⁵ The composite return is due with the entity’s Iowa income return.

A partnership or S corporation may elect to pay Iowa income tax at the entity. The election is voluntary, and it binds the entity and its owners for that year. A single-member LLC, or another entity disregarded for federal and Iowa tax, cannot make its own election⁸. The department’s rate list puts the entity-level rate at 3.8%⁵ for 2025 and does not list 2026 yet.* Use the instructions for the year you are filing. Whether the election helps depends on your numbers. Ask a CPA.

Unemployment and new hires

A non-farm employer becomes liable after paying wages in any calendar quarter of the current or preceding year. Liability goes back to the first quarter wages were paid. Agriculture uses a different test: $20,000 or more of gross wages to agricultural laborers in a quarter, or 10 or more employees on some part of a day in 20 separate weeks. Domestic work uses $1,000 in a quarter. Family employment exclusions apply to an individually owned business, and to a partnership only when the exempt relationship exists with each partner. They do not apply to a corporation or an LLC. Register at myIowaUI within 30¹⁰ days after the first wages paid for Iowa work. The handbook tells out-of-state employers to register as soon as those wages are paid.

The wage base is $20,400 in 2026. Iowa Workforce Development has announced $21,100¹¹ for 2027. The 2026 handbook prints $39,500 for 2025. Use the year you are filing. Employers do not deduct unemployment tax from pay. A new non-construction employer is assigned at least 1%. For 2026, that rate is 1.000%. A new construction employer is assigned rank 9. For 2026, that rate is 5.4%. Reports are due the last day of the month after the calendar quarter. A Saturday, Sunday, or legal holiday moves the due date to the next business day¹². File the quarterly report even when that quarter had no employment¹⁰. A late report is penalized. The handbook does not print the amount.* Read the notice.

New hires and rehires: within 15 days. An employer who reports electronically may send batches not less than 12 and not more than 16 days apart The report includes the employee's date of birth and whether dependent health care coverage is available A willful failure to report is punishable as contempt.¹³

Contractors: A payor who is not under the employee rule reports a contractor within 15 days after paying more than the 1099-MISC filing amount, if the payments are not a single lump sum for the year. One report per contractor.¹⁴

What you get back

An EIN from the IRS if you applied, a GovConnectIowa¹ login, and a permit or account number for each tax you registered. Sales tax stays on the frequency the amount puts you on. Write down whether you are annual or monthly. Unemployment, if you owe it, is a separate account at myIowaUI¹⁰.