Iowa: a two-day clothing tax holiday with strict coupon rules, and a State Fair a week later

Iowa's annual sales tax holiday

A cart-tier plan that keeps each item under the cap

1. Before August 6, 2027

   Price the clothing and footwear in the offer at under 100 dollars each after your own discount. A store discount counts: the Department's example brings a 110 dollar shirt to 99 dollars with a 10 percent discount. Check each article, since the cap applies to every item and not to the order.

   Source: Iowa Department of Revenue: Iowa's Annual Sales Tax Holiday

2. When you design the tiers

   Use cart tiers as the store's own discount, and do not offer a buy-one-get-one or a free-item tier on clothing near the cap. The Department says the prices of such offers cannot be averaged, so a free second item will not bring the first item under 100 dollars. Test a cart to see how a cart-level discount splits across items; the Department page does not say.

   Source: Iowa Department of Revenue: Iowa's Annual Sales Tax Holiday

3. When you write the banner

   Do not promise to pay the tax on items that do not qualify. The Department says businesses cannot advertise that they will pay or absorb the tax on non-qualifying items, so name the qualifying items and the dates instead.

   Source: Iowa Department of Revenue: Iowa's Annual Sales Tax Holiday

4. On orders placed on Friday and Saturday

   An online item qualifies when it is ordered and paid for during the two days, even if it is delivered later, so accept orders through midnight Saturday in your store's time zone and say so in the cart.

   Source: Iowa Department of Revenue: Iowa's Annual Sales Tax Holiday

5. For returns and gift cards

   Do not let a gift card or a manufacturer's coupon stand in for a store discount, since neither lowers the price for the cap. Tell shoppers that credit toward a different item is taxed on the new item's full price.

   Source: Iowa Department of Revenue: Iowa's Annual Sales Tax Holiday

6. The week of August 12, 2027

   The Iowa State Fair runs August 12 to 22, so give it its own short offer after the tax holiday ends instead of stretching the first one. Two clear windows read better than one long one.

   Source: Iowa State Fair

7. As Iowa sales grow

   Track gross revenue from Iowa sales, counting exempt and wholesale sales too. At 100,000 dollars or more a remote seller must collect, starting the first day of the next month that begins at least 30 days after the line is crossed.

   Source: Iowa Department of Revenue: Remote Sellers and Marketplace Facilitators

Build it with the Cart discount tiers template.

Requires: Growth plan or higher.

Questions merchants ask

When is Iowa's sales tax holiday in 2027?

The Department's rule is the first Friday in August from 12:01 a.m. to midnight the following day, so the 2027 holiday computes to Friday, August 6 and Saturday, August 7. The Department's page states the rule rather than a 2027 notice, so confirm the dates before you schedule an offer. This is not tax advice.

Can my store coupon bring a 110 dollar jacket under the cap?

Yes, if it is your own store's coupon or discount. The Department says store coupons and discounts reduce the sales price, so a discount that brings the jacket to 99 dollars makes it exempt. A manufacturer's coupon, a rebate or a gift certificate does not.

Does a buy-one-get-one offer qualify?

Not the way many stores want. The Department says the total price of a buy-one-get-one offer cannot be averaged so both items qualify: if the first pair of pants is 110 dollars and the second is free, tax is due on 110 dollars, and the store cannot price each pair at 55 dollars.

How much sales tax does an Iowa order carry?

The Department's guide lists a 6 percent state rate and a 1 percent local option tax that applies to most sales, because many jurisdictions have adopted it, though some cities and rural areas have not. Use the Department's rate lookup for the shipping address. This is not tax advice.

When does an out-of-state store have to collect Iowa tax?

The Department says a remote seller must collect when it has 100,000 dollars or more in gross revenue from Iowa sales, counting exempt and wholesale sales as well, starting the first day of the next month that begins at least 30 days after it crosses the line. Confirm your own position with the Department.

Related reading

• Discount Messages Shoppers See at Checkout
• Sales Tax Holidays for Online Sellers
• Tiered Cart Discounts on Shopify: Setup

Dates to plan around

1. Aug 6, 2027 to Aug 7, 2027Sales tax holiday (computed: first Friday and Saturday of August)Iowa Department of Revenue: Iowa's Annual Sales Tax Holiday (2027 dates computed from its rule)
2. Aug 12, 2027 to Aug 22, 2027Iowa State Fair, Des MoinesIowa State Fair

The year at a glance

Facts and sources

• The Department says Iowa Code section 423.3(68)(a)(2) sets the sales tax holiday from 12:01 a.m. on the first Friday in August to midnight the following day, not including Sunday, and that no sales tax or local option sales tax is collected on an article of clothing or footwear with a selling price under 100 dollars.

  Iowa Department of Revenue: Iowa's Annual Sales Tax Holiday (accessed October 10, 2026)

• Applying the first-Friday-in-August rule to 2027 gives Friday, August 6 and Saturday, August 7, 2027 (computed by us); the Department's page states the rule, not a 2027 notice, so confirm the dates before you schedule an offer.

  Iowa Department of Revenue: Iowa's Annual Sales Tax Holiday (2027 dates computed from its rule) (accessed October 10, 2026)

• The Department says businesses that are open on the holiday days are required to participate, and that businesses cannot advertise that they will pay or otherwise absorb the sales tax on items that do not qualify.

  Iowa Department of Revenue: Iowa's Annual Sales Tax Holiday (accessed October 10, 2026)

• The exemption applies to each article priced under 100 dollars regardless of how many are on the same invoice, does not apply in any way to the price of an item selling for 100 dollars or more, and does not allow a pair or a single-tag item such as a suit to be split into pieces priced under the cap.

  Iowa Department of Revenue: Iowa's Annual Sales Tax Holiday (accessed October 10, 2026)

• The Department says store coupons and discounts reduce the sales price, so a 10 percent store discount that brings a 110 dollar shirt to 99 dollars makes it exempt while a 400 dollar suit at 360 dollars stays taxable, but a manufacturer's coupon, a rebate or a gift certificate cannot be used to bring an item under 100 dollars.

  Iowa Department of Revenue: Iowa's Annual Sales Tax Holiday (accessed October 10, 2026)

• The Department says the price of items advertised as buy one, get one free or at a reduced price cannot be averaged so that both qualify: with pants advertised as buy one, get one free and the first pair priced at 110 dollars, tax is due on 110 dollars and the store cannot price each pair at 55 dollars to qualify, although the retailer may advertise and sell the pants for 50 percent off at 55 dollars each.

  Iowa Department of Revenue: Iowa's Annual Sales Tax Holiday (accessed October 10, 2026)

• The Department says eligible items bought by mail order, catalog or internet are exempt if they are ordered and paid for during the holiday, even if delivery is made after it.

  Iowa Department of Revenue: Iowa's Annual Sales Tax Holiday (accessed October 10, 2026)

• The Department says an eligible item bought in the holiday and exchanged for the same item later needs no additional tax, but a return that earns credit toward a different item is taxed on the full price of the new item, and an exchange for a 125 dollar dress cannot use an 85 dollar credit to bring it under the cap.

  Iowa Department of Revenue: Iowa's Annual Sales Tax Holiday (accessed October 10, 2026)

• The Department's sales and use tax guide says the sales tax rate is 6 percent, an additional 1 percent local option sales tax applies to most sales because many jurisdictions impose it, some cities in a county may have it and some may not, and a jurisdiction may enact it on January 1 or July 1.

  Iowa Department of Revenue: Sales and Use Tax Guide (accessed October 10, 2026)

• The Department says remote sellers must collect Iowa sales tax only if they have 100,000 dollars or more in gross revenue from Iowa sales, counting all revenue including exempt and wholesale sales, and one that crosses the line in the current year starts on the first day of the next month that begins at least 30 days later and collects through the following calendar year.

  Iowa Department of Revenue: Remote Sellers and Marketplace Facilitators (accessed October 10, 2026)

• The Iowa State Fair's site gives the 2027 fair as August 12 to 22, 2027 in Des Moines, with the theme It's All That, and says the fairgrounds host events for the other 354 days of the year.

  Iowa State Fair (accessed October 10, 2026)

• USDA's 2025 state overview for Iowa lists corn for grain production of 2,761,500,000 bushels from 13,150,000 harvested acres and a hog inventory of 25,200,000 head on December 1, 2025.

  USDA National Agricultural Statistics Service: 2025 State Agriculture Overview for Iowa (accessed October 10, 2026)

• Iowa has 55,857 square miles of land area and 56,273 square miles in total.

  U.S. Census Bureau: State Area Measurements (2010) (accessed October 10, 2026)

• The Census Bureau's Vintage 2025 estimate puts Iowa's resident population at 3,238,387 on July 1, 2025.

  U.S. Census Bureau: Vintage 2025 state population estimates (accessed October 10, 2026)