Car Sales Tax in Iowa
The average sales tax on a car purchase in Iowa is 5.988%, including county and state rates combined.
Written by Pat Roache
Reviewed by Jessica Barrett
All car sales in the state of Iowa are subject to a 6% sales tax at the state level and up to 1% sales tax for county and local rates. The combined average sales tax on a car purchase in Iowa is 5.988%.
There are a lot of costs that go into a new car purchase beyond the starting price advertised by your car dealer. Sales taxes are calculated for your car at the state, county, and local levels, so the final price can vary greatly depending on where you buy your car.
Every state has different rates and policies when it comes to determining car sales tax by location, but luckily for most Iowans, the Hawkeye state keeps its taxes pretty straightforward. Keep reading for a clear understanding of what to expect for your car sales tax in Iowa and other fees from
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How much is the car sales tax rate in Iowa?
The sales tax for vehicles in Iowa is currently 5%, as opposed to the standard 6% rate for most other purchases. This 5% rate is applied towards a one-time registration fee and is collected for both new and used car purchases. However, you’ll need to factor in sales tax at the county or local level to determine the total sales tax on your car.
The state limits county and local tax rates to a maximum of 1%. That means that no matter where you buy a car in Iowa from
Des Moines
to Dubuque
, your sales tax should never exceed a combined 6%. The current average across all Iowa counties is 5.988%.MORE: Iowa gas tax
How are car trade-ins taxed in Iowa?
In Iowa, you’re only taxed on the net value of your car purchase after deducting the value of a
trade-in vehicle
. In other words, the value of your trade-in is not subject to car sales taxes. Toyota Avalon
worth $2,500, you’ll only be paying the 6% sales tax in Linn County on a net value of $24,500. Rebates or incentives at the dealership, however, cannot be deducted from the taxed value of your vehicle. If you had been offered a $2,500 rebate on your $27,000 Honda CR-V, you would still have to pay taxes on a net value of $27,000.
How to calculate sales tax on a car in Iowa
The Iowa Department of Revenue offers an
online tax calculator
that you can use to estimate the exact sales tax on a new vehicle. All you have to do is enter the location of your dealer and the taxable value of your car purchase. Key Takeaway Apply the standard state average combined sales tax of 5.988% to calculate the car sales tax on a new vehicle.
Exemptions from Iowa car sales tax
You won’t be able to avoid paying sales tax for any reason when you purchase a vehicle for personal use. However, the
Department of Revenue’s UT510 Manual
identifies the following vehicle purchases as exempt:- Vehicles purchased as a gift, prize, or transfer without consideration
- Vehicles purchased for use by a qualifying nonprofit organization or educational institution
- Vehicles purchased for use by qualifying government units or governmental corporations
- Vehicles acquired by a dealer that is licensed to sell the make of
- Vehicles that are intended to be offered as a rental or a lease
MORE: Car inspection in Iowa
How to estimate Iowa tax, title, and registration fees
To calculate the total cost of your vehicle, you’ll need to consider title, registration, plate transfer, and documentation fees in addition to the total sales tax. Here’s a breakdown of the combined expenses of a car purchase in Iowa:
Cost | Average cost |
|---|---|
Sales tax | 5.988% |
Registration fee | 1% of the car value plus $0.40 for every 100 lbs of the car’s weight |
Title fee | $10 |
Plate transfer | $5 |
Documentation fee | $135 |
If we return to the example of the Honda CR-V, which weighs 3,337 pounds, you would pay a registration fee of $283.20—$270 for 1% of the $27,000 value and $13.20 for $0.40 times 33 counts of a hundred pounds.
MORE: Is car insurance tax deductible?
How to find affordable car insurance in Iowa
The final cost you’ll have to consider for a car purchase is your monthly payment for Iowa car insurance. Avoid overpaying on your policy by shopping for the lowest rate with car insurance super app
Jerry
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FAQ
How much is sales tax on a used car in Iowa?
Iowa uses the same combined sales tax for both new and used cars—5% at the state level plus 0 to 1% in local taxes depending on where you live. The average sales tax for a used car in Iowa is 5.988%.
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