Construction Industry Sales Tax Tips from the Iowa Department of Revenue

Construction Industry Sales Tax Tips from the Iowa Department of Revenue

One of the most common questions received by the Department is how to handle Iowa sales tax related to construction.

Construction businesses can fall into four general categories:

  • Contractor
  • Contractor-Retailer
  • Repair Company
  • Manufacturer-Contractor

How and when sales tax applies to both purchases and sales made by these businesses, depends on the type of contractor involved.

Building materials are normally always subject to tax.  Labor may be taxable is some cases, but not in others.  Labor is only taxable if the work being performed is listed as a taxable service.

In addition, a service which is ordinarily taxable would be exempt from sales tax if performed on or in connection with:

  • New Construction
  • Reconstruction
  • Alteration
  • Expansion
  • Remodeling

The Department encourages construction businesses to find out more about their sales tax responsibilities by using the following resources:

You can also stay up to date on all sorts of tax topics through our other online outlets:


Content contributed by Greg Stokke, Iowa Department of Revenue.

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