Iowa Utility Sales Tax Exemption

Manufacturers and industrial processors with facilities located in Iowa, may be eligible for a utility tax exemption. Iowa offers an exemption from state and local sales tax on the purchase of electricity, natural gas, and water used in qualifying production activities. This tax exemption is authorized by I.A.C. 701-17.2.

Exemption Language of I.A.C. 701-17.2

"Receipts from the sale of tangible personal property which is to be consumed as fuel in creating power, heat or steam for processing, including grain drying or for generating electric current, shall be exempt from sales tax."

Utility Study Requirement for Exemption Qualification

An Iowa utility tax study must list every piece of equipment and appliance (production and non-production) that uses the utility and the annual consumption of each. Failure to properly calculate or classify utility usage is cause for denial of the exemption.

Iowa Statute of Limitations on Tax Refund

3 years

State Sales Tax Rate: 6%

Average Local Sales Tax Rate: 0.94%

Helpful Resources

Iowa Utility Exemption Certificate: Exemption Certificate 31-113a

Iowa Utility Exemption Statute/Rule: I.A.C. 701-17.2

Iowa Claim Form for Tax Refund: IA 843 Claim for Refund