| 1 | 1 | | House File 498 - Introduced HOUSE FILE 498 BY JACOBY A BILL FOR An Act eliminating the state sales and use taxes and including 1 effective date provisions. 2 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 3 TLSB 1923YH (4) 91 jm/jh |
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| 3 | 3 | | H.F. 498 Section 1. Section 423.2, subsection 1, unnumbered 1 paragraph 1, Code 2025, is amended to read as follows: 2 There is imposed a tax of six percent at the rate specified 3 in subsection 12 upon the sales price of all sales of tangible 4 personal property, sold at retail in the state to consumers or 5 users except as otherwise provided in this subchapter . 6 Sec. 2. Section 423.2, subsections 2 and 3, Code 2025, are 7 amended to read as follows: 8 2. A tax of six percent at the rate specified in subsection 9 12 is imposed upon the sales price of the sale or furnishing 10 of gas, electricity, water, heat, pay television service, and 11 communication service, including the sales price from such 12 sales by any municipal corporation or joint water utility 13 furnishing gas, electricity, water, heat, pay television 14 service, and communication service to the public in its 15 proprietary capacity, except as otherwise provided in this 16 subchapter , when sold at retail in the state to consumers or 17 users. 18 3. A tax of six percent at the rate specified in subsection 19 12 is imposed upon the sales price of all sales of tickets 20 or admissions to places of amusement, fairs, and athletic 21 events except those of elementary and secondary educational 22 institutions. A tax of six percent at the rate specified in 23 subsection 12 is imposed on the sales price of an entry fee or 24 like charge imposed solely for the privilege of participating 25 in an activity at a place of amusement, fair, or athletic event 26 unless the sales price of tickets or admissions charges for 27 observing the same activity are taxable under this subchapter . 28 A tax of six percent at the rate specified in subsection 12 29 is imposed upon that part of private club membership fees or 30 charges paid for the privilege of participating in any athletic 31 sports provided club members. 32 Sec. 3. Section 423.2, subsection 4, paragraph a, Code 2025, 33 is amended to read as follows: 34 a. A tax of six percent at the rate specified in subsection 35 -1- LSB 1923YH (4) 91 jm/jh 1/ 4 |
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| 5 | 5 | | H.F. 498 12 is imposed upon the sales price derived from the operation 1 of all forms of amusement devices and games of skill, games of 2 chance, raffles, and bingo games as defined in chapter 99B , and 3 card game tournaments conducted under section 99B.27 , that are 4 operated or conducted within the state, the tax to be collected 5 from the operator in the same manner as for the collection of 6 taxes upon the sales price of tickets or admission as provided 7 in this section . Nothing in this subsection shall legalize any 8 games of skill or chance or slot-operated devices which are now 9 prohibited by law. 10 Sec. 4. Section 423.2, subsection 5, Code 2025, is amended 11 to read as follows: 12 5. There is imposed a tax of six percent at the rate 13 specified in subsection 12 upon the sales price from the 14 furnishing of services as defined in section 423.1 . 15 Sec. 5. Section 423.2, subsection 7, paragraph a, 16 unnumbered paragraph 1, Code 2025, is amended to read as 17 follows: 18 A tax of six percent at the rate specified in subsection 12 19 is imposed upon the sales price from the sales, furnishing, or 20 service of solid waste collection and disposal service. 21 Sec. 6. Section 423.2, subsection 8, paragraph a, Code 2025, 22 is amended to read as follows: 23 a. A tax of six percent at the rate specified in subsection 24 12 is imposed on the sales price from sales of bundled 25 transactions. For the purposes of this subsection , a bundled 26 transaction is the retail sale of two or more distinct and 27 identifiable products, except real property and services to 28 real property, which are sold for one nonitemized price. A 29 bundled transaction does not include the sale of any products 30 in which the sales price varies, or is negotiable, based on 31 the selection by the purchaser of the products included in the 32 transaction. 33 Sec. 7. Section 423.2, subsection 9, Code 2025, is amended 34 to read as follows: 35 -2- LSB 1923YH (4) 91 jm/jh 2/ 4 |
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| 7 | 7 | | H.F. 498 9. A tax of six percent at the rate specified in 1 subsection 12 is imposed upon the sales price from any mobile 2 telecommunications service, including all paging services, 3 that this state is allowed to tax pursuant to the provisions 4 of the federal Mobile Telecommunications Sourcing Act, Pub. 5 L. No. 106-252, 4 U.S.C. 116 et seq. For purposes of this 6 subsection , taxes on mobile telecommunications service, as 7 defined under the federal Mobile Telecommunications Sourcing 8 Act that are deemed to be provided by the customers home 9 service provider, shall be paid to the taxing jurisdiction 10 whose territorial limits encompass the customers place of 11 primary use, regardless of where the mobile telecommunications 12 service originates, terminates, or passes through and 13 shall in all other respects be taxed in conformity with 14 the federal Mobile Telecommunications Sourcing Act. All 15 other provisions of the federal Mobile Telecommunications 16 Sourcing Act are adopted by the state of Iowa and incorporated 17 into this subsection by reference. With respect to mobile 18 telecommunications service under the federal Mobile 19 Telecommunications Sourcing Act, the director shall, if 20 requested, enter into agreements consistent with the provisions 21 of the federal Act. 22 Sec. 8. Section 423.2, subsection 10, paragraph a, Code 23 2025, is amended to read as follows: 24 a. A tax of six percent at the rate specified in subsection 25 12 is imposed on the sales price of specified digital products 26 sold at retail in the state. The tax applies whether the 27 purchaser obtains permanent use or less than permanent use of 28 the specified digital product, whether the sale is conditioned 29 or not conditioned upon continued payment from the purchaser, 30 and whether the sale is on a subscription basis or is not on a 31 subscription basis. 32 Sec. 9. Section 423.2, subsection 12, Code 2025, is amended 33 by striking the subsection and inserting in lieu thereof the 34 following: 35 -3- LSB 1923YH (4) 91 jm/jh 3/ 4 |
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| 9 | 9 | | H.F. 498 12. The sales tax rate of seven percent is reduced to zero 1 beginning on or after January 1, 2026. 2 Sec. 10. Section 423.5, subsection 1, unnumbered paragraph 3 1, Code 2025, is amended to read as follows: 4 Except as provided in paragraph b , an excise tax at the 5 rate of six percent of the purchase price or installed purchase 6 price is imposed on the following: is reduced to zero beginning 7 on or after January 1, 2026. 8 Sec. 11. Section 423.5, subsection 4, Code 2025, is amended 9 by striking the subsection. 10 Sec. 12. EFFECTIVE DATE. This Act takes effect January 1, 11 2026. 12 EXPLANATION 13 The inclusion of this explanation does not constitute agreement with 14 the explanations substance by the members of the general assembly. 15 Beginning on after January 1, 2026, this bill reduces the 16 statewide sales and use tax from 6 percent to 0. By reducing 17 the statewide sales tax to zero, the bill also eliminates the 1 18 percent sales tax dedicated to the secure an advanced vision 19 for education fund (SAVE). A local option tax adopted pursuant 20 to Code chapter 423B is not reduced by the bill. 21 -4- LSB 1923YH (4) 91 jm/jh 4/ 4 |
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