Iowa Sales Tax Exemption: The Complete 2026 Guide for Businesses (Form 31-014, Resale, Manufacturing & Agriculture)
If your business buys inventory, machinery, or agricultural inputs in Iowa, you may be paying 6% state sales tax — often 7% with local option tax — on purchases that legally qualify for an Iowa sales tax exemption. Across a year of purchasing, that overpayment adds up quickly, and in most cases the exemption is available the moment you hand your vendor the right certificate.
This guide breaks down exactly how the Iowa sales tax exemption works for businesses in 2026: who qualifies, how to complete Form 31-014 correctly, the deadlines that make or break a certificate, and — just as important — how to recover tax you’ve already overpaid. We’ll also flag the mistakes that get exemptions denied in an Iowa Department of Revenue audit.
What Is an Iowa Sales Tax Exemption?
Iowa imposes a 6% state sales and use tax on most retail sales of tangible personal property and many services. On top of that, most cities and counties add a 1% Local Option Sales Tax (LOST), bringing the combined rate to 7% in most of the state. Iowa is destination-based, meaning the rate is set by where the goods are delivered — not where the seller sits. Because not every jurisdiction has adopted LOST, the rate isn’t perfectly uniform, which makes claiming your exemptions the cleanest way to control cost.
An Iowa sales tax exemption lets a qualified buyer purchase goods without paying sales tax at the point of sale. Items become exempt two ways:
Product-based exemptions apply automatically to certain goods regardless of who buys them — for example, most unprepared groceries and prescription drugs. No certificate is required.
Buyer- or use-based exemptions depend on who you are or how you’ll use the item — for example, inventory bought for resale, or machinery used directly in processing. These require a completed exemption certificate.
Here’s the part that trips up business owners: for buyer- and use-based exemptions, you do not send anything to the State of Iowa for approval. You complete a certificate and give it directly to your vendor. The vendor keeps it on file, stops charging you tax, and relies on that certificate if the Department of Revenue audits the sale. If the certificate is missing, incomplete, or stale, the tax obligation can land back on the buyer — which is why getting it right matters.
Who Qualifies for a Sales Tax Exemption in Iowa?
For businesses, Iowa recognizes several use- and buyer-based exemption categories. The most common:
Resellers / retailers — Businesses buying inventory to resell, lease, or rent in the ordinary course of business. Requires an active Iowa sales tax permit.
Manufacturers / processors — Machinery and equipment directly and primarily used in processing tangible personal property for sale. This is Iowa’s core manufacturing exemption — more on the test below.
Agricultural producers — Farm machinery and equipment used directly in production (tractors, grain dryers, baling wire and twine, and similar), plus qualifying inputs.
Research & development — Qualifying R&D equipment.
Pollution-control, recycling, and replacement parts — Qualifying equipment and parts tied to exempt processing activity.
Government units — Federal, state, and local government entities and public schools.
Out-of-state businesses — Buyers registered elsewhere can generally claim resale using their home-state certificate or the Uniform Sales & Use Tax (Multijurisdiction) certificate.
Important exception — nonprofits: Unlike many states, Iowa does not automatically exempt nonprofits from sales tax on their purchases. A 501(c)(3) is generally treated like any private buyer unless it appears on Iowa’s specific statutory list. See the Iowa Nonprofit section below.
Iowa Sales Tax Exemption Certificate: Form 31-014
Iowa keeps it simple with a single document: Form 31-014, the Iowa Sales/Use/Excise Tax Exemption Certificate (current version 31-014a). One form covers resale, processing/manufacturing, agriculture, government, R&D, and the qualifying exempt entities — you just check the applicable exemption reason.
What Form 31-014 Covers
Purchases for resale, lease, or rental
Processing / manufacturing machinery and equipment
Agricultural production purchases
Government and qualifying exempt-entity purchases
Qualifying R&D, pollution-control, recycling, and replacement parts
What Form 31-014 Does Not Cover
Form 31-014 is not the right document for:
Energy used in processing or agriculture (fuel, electricity, gas used to create heat/power/steam) — use Form 31-113
Motor fuel / special fuel tax — use Form 84-025
Vehicles subject to registration — handled through the county treasurer, not this certificate
Using 31-014 for one of these is a fast route to a rejected exemption.
Key Fields on Form 31-014
The certificate must be fully completed to be valid, or the seller must charge tax. You’ll provide:
Purchaser identification — Legal name, address, and the general nature of your business.
Seller information — The vendor you’re giving the certificate to.
Type of certificate — Single purchase (enter the related invoice/PO number) or blanket (covers ongoing purchases from that seller).
Reason for exemption — Check the applicable box (resale, processing, agriculture, etc.).
Permit number — For resale, your Iowa sales/use tax permit number.
Signature — Signed and dated by an authorized representative.
Two Deadlines Iowa Businesses Miss
The 90-day rule. To be valid, the certificate must be completed and in effect within 90 days of the date of sale. Don’t let vendors sit on an unsigned form.
The blanket expiration. A blanket certificate stays valid until it’s revoked or until 12 months pass with no purchases between the same buyer and seller. Long gaps can quietly void it.
Other Iowa Sales Tax Exemption Forms You Should Know
How to Get an Iowa Sales Tax Exemption (Step-by-Step for Businesses)
Here’s the sequence to claim your exemption correctly and keep it audit-proof.
Step 1 — Confirm Your Exemption Category
Pin down why you qualify: resale, processing/manufacturing, agriculture, R&D, or government. The category dictates the reason box you’ll check and the documentation you’ll need. Don’t guess — a manufacturer buying office furniture does not get the processing exemption on that purchase.
Step 2 — Get Your Iowa Sales Tax Permit (Resellers)
If you’re claiming resale, register for an Iowa sales/use tax permit through GovConnectIowa. You’ll enter that permit number on Form 31-014. (Manufacturers and farmers who aren’t reselling still use 31-014 but follow the instructions for their specific exemption.)
Step 3 — Gather Your Documentation
Depending on your exemption, have ready:
Your FEIN and entity details
Your Iowa sales tax permit number (for resale)
A clear description of the items and their exempt use
For out-of-state buyers: your home-state registration or the Multijurisdiction certificate
Step 4 — Complete the Correct Certificate
For most businesses, that’s Form 31-014. Choose blanket for a recurring vendor relationship, or single purchase (with the invoice/PO number) for a one-off. Complete every field — partial certificates are invalid.
Step 5 — Give the Certificate to the Vendor (Not the State)
Hand the completed certificate to your seller within the 90-day window. They keep it on file and stop charging tax on qualifying purchases. Iowa does not pre-approve these certificates — the seller accepts them in good faith and retains them as proof.
Step 6 — Keep Records for Audits
Retain copies of every certificate you issue and invoices that match each exemption claim. If a resale-exempt item is later used for your own purposes, you owe the tax — so your records need to show the exempt use actually happened. Clean documentation turns an audit into a non-event.
Which Iowa Exemption Form Do You Need? (Quick Decision Guide)
Buying energy/fuel used in processing or ag? → Form 31-113.
Claiming a motor-fuel tax exemption? → Form 84-025.
Buying a vehicle subject to registration? → Handle at the county treasurer, not on 31-014.
Out-of-state buyer purchasing for resale? → Home-state cert or the Multijurisdiction certificate.
Everything else — resale, processing, ag, government, R&D? → Form 31-014.
Already paid tax you shouldn’t have? → File an Iowa refund claim.
Do Iowa Nonprofits Pay Sales Tax? (Usually, Yes)
This is where Iowa surprises people: nonprofit and religious organizations are not automatically exempt from Iowa sales tax on their purchases, even when they’re exempt from state and federal income tax. For sales-tax purposes, a typical 501(c)(3) is treated the same as any private buyer and pays tax (plus local option tax) on taxable goods and services.
Iowa exempts a specific statutory list of entities, including:
Nonprofit hospitals licensed under Iowa Code chapter 135B
Private nonprofit educational institutions (purchases used for educational purposes)
Government units and public schools
Certain designated entities (for example, qualifying community health centers and other statutorily named organizations)
Two nuances worth knowing:
Purchases for resale are always exempt — even for a nonprofit. A booster club buying concession-stand inventory to resell can use a resale exemption.
Fundraising sales by educational, religious, or charitable organizations are generally exempt when the net proceeds are used for those qualifying purposes.
If your organization qualifies as an exempt entity, it still uses Form 31-014, checks the appropriate box, and pays from the entity’s own account. If you’re unsure whether your nonprofit is on the list, that’s worth confirming before you assume every purchase is tax-free — the wrong assumption is a common and expensive one.
Manufacturing & Agricultural Exemptions: Where Iowa Businesses Overpay
The processing and agricultural exemptions carry the most dollars — and the most misapplication.
The Iowa Processing/Manufacturing Test
Iowa exempts machinery and equipment directly and primarily used in processing tangible personal property for sale. Both parts matter:
Directly used — the item is used in the processing activity itself, and
Primarily used — its main use is that qualifying processing, not general operations.
Production and processing equipment, qualifying replacement parts, pollution-control equipment, and recycling equipment typically qualify. Office supplies, general administrative equipment, and items used before or after the production process generally do not. Misclassifying these is a frequent audit adjustment.
Agricultural Exemptions
Farm machinery and equipment used directly in agricultural production — tractors, grain dryers, baling wire and twine, and similar — qualify on Form 31-014. As with processing, the test is use in production, not general business use.
The Refund Opportunity Most Businesses Miss
Here’s the part with real dollars: if you’ve been paying Iowa sales or use tax on purchases that actually qualified for exemption, you can generally recover it — either by requesting a refund from your supplier or by filing a refund claim with the Iowa Department of Revenue, generally within three years of when the tax was paid. For a processor or manufacturer that never set up its accounts as exempt, that lookback can add up to a meaningful recovery. This is exactly what a focused exemption review is designed to surface.
Common Iowa Sales Tax Exemption Mistakes to Avoid
Missing the 90-day window. A certificate not completed and in effect within 90 days of the sale isn’t valid.
Letting a blanket certificate lapse. Twelve months with no purchases from that vendor voids it.
Using the wrong form. 31-014 for energy or fuel, for example — those need 31-113 or 84-025.
Assuming 501(c)(3) = automatic exemption. In Iowa, most nonprofits pay sales tax on purchases.
Claiming exemption on non-qualifying purchases. Office furniture isn’t processing equipment. Overreaching invites assessments.
No permit number for resale. Resale claims require an active Iowa sales tax permit.
Never reviewing past purchases. If you’ve overpaid, the refund window is open only so long.
Iowa Sales Tax Exemption FAQ
Do I have to apply to the State of Iowa for a sales tax exemption?
No. You complete Form 31-014 and give it to your vendor. Iowa does not approve or deny these certificates in advance — the seller accepts a completed certificate and keeps it on file.
What is the Iowa sales tax rate?
The state rate is 6%. Most cities and counties add a 1% local option sales tax, so the combined rate is typically 7%. Iowa is destination-based, so the rate depends on where the goods are delivered.
Do nonprofits pay sales tax in Iowa?
Usually, yes. Iowa does not automatically exempt nonprofits on their purchases. Only specific statutory entities — such as nonprofit hospitals and private nonprofit educational institutions — are exempt. Purchases for resale and qualifying fundraising sales are treated separately.
How long is an Iowa exemption certificate valid?
A blanket certificate is valid until revoked or until 12 months pass with no purchases between the same buyer and seller. Any certificate must be completed and in effect within 90 days of the sale.
Can an out-of-state business claim an Iowa resale exemption?
Generally yes. Iowa vendors will typically accept a valid resale certificate from your home state or the Uniform Sales & Use Tax (Multijurisdiction) certificate, provided it’s complete.
What’s the difference between a blanket and single-purchase certificate?
A single-purchase certificate covers one transaction (you enter the invoice/PO number). A blanket certificate covers ongoing purchases from the same vendor under the same exemption.
Can I recover Iowa sales tax I already paid by mistake?
Often, yes. You can request a refund from your supplier or file a refund claim with the Iowa Department of Revenue, generally within three years of the date the tax was paid.
Does Form 31-014 cover energy or fuel used in manufacturing?
No. Energy used to create heat, power, or steam for processing or agriculture uses Form 31-113, and motor/special fuel tax uses Form 84-025.
Conclusion: Claim Every Iowa Exemption You’re Entitled To
An Iowa sales tax exemption comes down to three things: confirming your category, completing Form 31-014 correctly, and respecting the deadlines that keep it valid. For most businesses the form is straightforward — but the 90-day rule, the blanket-expiration trap, and Iowa’s narrow nonprofit rules are exactly where exemptions quietly fail.
The bigger opportunity is usually behind you: purchases where you paid 6% (or 7% with local tax) you never owed. A focused review of resale, processing, and agricultural purchases frequently uncovers missed exemptions — and refunds still recoverable within Iowa’s window.
Not sure which purchases qualify — or whether you’ve been overpaying? We offer a free Iowa sales tax exemption consult. We’ll review your exemption categories, make sure your 31-014 certificates are complete and current, and flag any overpaid tax you may be able to recover.
👉 Book your free exemption audit today.
Related reading: Our Indiana Sales Tax Exemption Guide (add link once published) • How to Apply for Sales Tax Exemption in Ohio • Our Services
This article is for general informational purposes and is not tax or legal advice. Sales tax rules change; confirm current requirements with the Iowa Department of Revenue or contact us for guidance specific to your business.