Car Sales Tax in Iowa (IA) & Fees [+ Tax Calculator]
Michael Collado is a car buying expert and has been a professional automotive writer since 2009. He’s written about dealership sales, vehicle reviews and comparisons, and service and maintenance for over 100 national automotive dealerships. Previously, Collado was a copywriter at the ad agency TBWA/Chiat/Day where he worked on brand campaigns for Nissan, ABC Television, Sony PlayStation, and Energizer. His recognition in the ad industry includes awards from Communication Arts and The Clios.
Collado has a Bachelor’s degree from the University of South Florida, with a major in Psychology and a minor in Marketing.
Sales tax and other fees are vital to consider when buying a new car. Car sales tax in Iowa is 5% of the vehicle's purchase price.
Local governments may also charge up to 1% sales tax on cars.
Here’s what to expect when it comes to taxes and fees in the state of Iowa.
Key Takeaways
- The state of Iowa charges 5% car sales tax.
- Local and county car sales tax may also be up to 1% in Iowa.
- The average total car sales tax rate in Iowa (state+ local) is 5.988%.
- New and used vehicle purchases are subject to the car sales tax, but it does not apply t the value of trade-ins.
Table of Contents
- Key Takeaways
- How Much Is the Car Sales Tax in Iowa?
- How to Calculate Iowa Sales Tax on a Car
- Iowa Car Sales Tax Calculator
- Do I Have to Pay Sales Tax on a Used Car?
- Car Sales Tax for Trade-Ins in Iowa
- Car Sales Tax on Private Sales in Iowa
- Tax on Rebates & Dealer Incentives
- Iowa DMV/State Fees
- Iowa Car Sales Tax Exemptions
- Iowa EV Rebates & Incentives
- Car Sales Tax in Iowa: The Final Verdict
- Best Car Deals by Category
- Frequently Asked Questions
How Much Is the Car Sales Tax in Iowa?
The state sales tax on a car purchase in Iowa is 5%.
Iowa considers the 5% sales tax as a "One-Time Registration Fee".
Local and county car sales tax may also be up to 1%.
Therefore, the average car sales tax in Iowa is 5.988%.
This is different than the standard 6% sales tax rate for other goods and services in Iowa.
How to Calculate Iowa Sales Tax on a Car
You can calculate the sales tax in Iowa by multiplying the final purchase price by .05%.
For example, let’s say that you want to purchase a new car for $30,000, you would use the following formula to calculate the sales tax:
$30,000 x .05= $1,500
This means that your sales tax is $1,500 on a $30,000 purchase price.
Calculate Car Sales Tax in Iowa Example:
- Initial Car Price: $30,000
- Sales Tax Rate: 5%
- Trade-In Amount: $5,000
- Manufacturer/Dealer Rebate: $3,000
Sales Tax = ($30,000 - $5,000 - $3,000) * .05
Sales Tax = $1,100
Remember that the total amount you pay for a car (out the door price) not only includes sales tax, but also registration, and dealership fees.
Iowa Car Sales Tax Calculator
Do I Have to Pay Sales Tax on a Used Car?
Yes, in Iowa you must pay the car sales tax on a used vehicle. The sales tax rules remain the same whether the car is new or used.
Still, purchasing a used car is a wise choice for many. The overall price will be lower, which means you will pay less in sales tax than with a new vehicle.
Car Sales Tax for Trade-Ins in Iowa
You don’t have to pay sales tax on the trade-in value in Iowa. In other words, be sure to subtract the trade-in amount from the car price before calculating sales tax.
As an example, let’s say you are purchasing a new SUV for $35,000 and your trade-in is worth $10,000. You will subtract the trade-in value by the purchase price and get $25,000. Therefore, your car sales tax will be based on the $25,000 amount.
Car Sales Tax on Private Sales in Iowa
A sales tax is required on all private vehicle sales in Iowa. It is the same 5% you would pay at a dealership, but you are responsible for paying the DMV when registering the vehicle.
Tax on Rebates & Dealer Incentives
You do not have to pay tax on dealer and manufacturer rebates in Iowa. In other words, be sure to subtract the dealer rebate amount from the car price before calculating sales tax.
As an example, if you are purchasing a new car for $30,000 with a $5,000 rebate, you will pay sales tax on the $25,000 cost of the car.
Iowa DMV/State Fees
There are some other state and DMV fees associated with the purchase of a vehicle in Iowa.
A few of these fees include:
- Sales Tax: 5.988% (average)
- Registration Fee: 1% of car price
- Title Fee: $25
- Plate Transfer Fee: $5
Iowa Dealership Fees
Dealerships apply extra fees, sometimes referred to as “doc fees,” with the sale of the car.
Though these fees vary based on the dealership, the average dealership fee in Iowa is $135, with a $180 limit on how much dealerships can charge.
Iowa Car Sales Tax Exemptions
Much like every state, Iowa has some sales tax exemptions for vehicle sales. Exemptions include:
- You receive the vehicle as a gift from a spouse, parent, child, grandparent, or grandchild.
- You receive the vehicle in a divorce.
- If you inherited the vehicle.
- You receive the vehicle from an individual’s revocable trust.
Iowa EV Rebates & Incentives
Available Iowa EV incentives are on top of the $7,500 Federal tax rebate offered on the purchase of new electric vehicles.
Car Sales Tax in Iowa: The Final Verdict
Iowa charges 5% sales tax on car purchases. Local governments can charge up to 1% as well, making the average vehicle sales tax in Iowa 5.988%. However, you should also consider DMV fees and dealership fees when evaluating the total car purchase price.
Plan your next vehicle purchase by using the Iowa car sales tax calculator above!
Looking for a vehicle sales tax from another state? Check out our comprehensive guide on car sales tax in every state.
Tax information and rates are subject to change, please be sure to verify with your local DMV.
