Iowa Tax Exemptions for Telecommunications Equipment

As of January 1, 2024, the state of Iowa ended the sales and use tax exemptions for purchasing computers and computer peripherals (hardware) that had previously been in place since 1985. It is important to note that this change does not affect the existing state sales tax exemption for central office equipment and transmission equipment used for Telecommunications services.

Qualifying office and transmission equipment includes:

  • Stored program control digital switches and their associated equipment used to switch or route communication signals with a system from the origination point to the appropriate destination.
  • Peripheral equipment used to support the transmission of communications over the network, such as emergency power equipment, lightning arrestors, fault alarm equipment, multiplex equipment, digital cross connects, terminating equipment, fiber optic electronics, communication hardware equipment, and test equipment.
  • Circuit equipment that utilizes the message path to carry signaling information or that utilizes separate channels between switching offices to transmit signaling information independent of the subscribers’ communication paths or transmission channels.
  • Radio equipment, including radio-transmitters and receivers utilized to transmit communication signals through the air from one location to another. Radio equipment also includes repeaters, which are located every 20 to 30 miles; at these points, radio signals are received, amplified and retransmitted.

Reference Rule 701-217 of the Iowa Administrative Code for additional information.

Telecommunications providers should continue to take advantage of this tax exemption as it is applicable to optimize operational costs and invest in infrastructure development. Please contact our Sales and Use Tax expert, Joe Birkett with any questions on the eligibility of equipment or the implications of the tax exemption.

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DISCLAIMER: This blog is provided for informational purposes only and is not a substitute for obtaining accounting, tax, or financial advice from a professional accountant. Presentation of the information in this article does not create nor constitute an accountant-client relationship. While we use reasonable efforts to furnish accurate and up-to-date information, the evolving landscape surrounding these topics is supported by regulations or guidance that are subject to change.

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