Car Sales Tax in Iowa
When combined with local and county car sales tax rates, the state average total car sales tax rate in Iowa is 5.988%.
Written by Pat Roache
Reviewed by Jessica Barrett
All car sales in the state of Iowa are subject to a 5% 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%.
- The state-wide car sales tax rate in Iowa is 5%.
- When combined with local and county car sales tax rates, the state average total car sales tax rate in Iowa is 5.988%.
- Car sales tax applies to all new and used vehicle purchases, but does not apply to the value of trade-ins.
- The state-wide car sales tax rate in Iowa is 5%.
- When combined with local and county car sales tax rates, the state average total car sales tax rate in Iowa is 5.988%.
- Car sales tax applies to all new and used vehicle purchases, but does not apply to the value of trade-ins.
Iowa’s car sales tax rate
The state sales tax for Iowa vehicles 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 collected by the Iowa Department of Transportation and is collected for both new car and used car purchases.
While the 5% rate is lower than the statewide standard sales tax rate, you’ll also need to factor in county or local sales tax information to determine the total sales tax on your car.
Iowa law limits county and local tax rates to a maximum of 1%. That means that no matter where you buy a motor vehicle in Iowa from
Des Moines
to Dubuque
, your sales tax should never exceed a combined 6%. The current average combined car sales tax across all Iowa counties is 5.988%.
MORE: Iowa gas tax
Iowa car sales tax on trade-ins
Iowa sales tax only applies to the net value of your car purchase after deducting the value of a
trade-in vehicle
from the purchase price. 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 rather than the full sales price. Your total tax payment would be approximately $1,470. Keep in mind: Manufacturer 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 used or new 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.
MORE:
Car loan in Iowa 2022
Exemptions from Iowa car sales tax
Iowa sales and use taxes apply to all vehicle sales for personal use. However, the
Department of Revenue’s UT510 Manual
identifies the following vehicle purchases as eligible for tax exemptions:- 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
How to estimate Iowa tax, title, and registration fees
To calculate the total amount you’ll pay for vehicle registration at the DMV, you’ll need to consider title, registration, plate transfer, and documentation fees (doc fees) in addition to the total sales tax due. 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 |
Doc fees | $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.
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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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