How Iowa City businesses should prepare for the Local Option Sales Tax

Beginning July 1, 2026, a 1% Local Option Sales Tax (LOST) will take effect in Iowa City, Coralville, and North Liberty, after being approved by voters in November of 2025.

The City of Iowa City has created a guide for local businesses on what LOST is, who must collect it, how to collect LOST, and much more. To see the full guide, visit www.icgov.org/LOST.

LOST summary

LOST is a 1% local sales tax approved by voters. It is collected at the point of sale on taxable goods and services and remitted to the Iowa Department of Revenue. The LOST is in addition to the State of Iowa's 6% sales tax.

If your business is required to collect Iowa state sales tax, you must also collect the 1% Local Option Sales Tax (LOST) on any taxable goods and services delivered to or received by customers in Iowa City, Coralville, or North Liberty. This applies to both in-person and online sales when Iowa law requires sales tax collection.

Whether a business must collect sales tax (including LOST) is determined by the Iowa Department of Revenue, not the City of Iowa City.

For questions about your specific situation, please contact the Iowa Department of Revenue (IDOR). You may find additional resources on their website:

Where can I get help?

For questions about whether LOST applies to your situation, contact the Iowa Department of Revenue.

For assistance updating your point-of-sale (POS) system or online sales platform, contact your platform provider or payment processor.

For individualized tax advice, consult your accountant or tax professional.