Bills › 90th General Assembly
Modifying the sales tax holiday by extending the holiday and including emergency preparedness supplies
Topics:Taxes
Where it is now
- Done: IntroducedJanuary 12, 2023
- Done: SubcommitteeJanuary 18, 2023
- Done: House committeeApril 5, 2023
- Skipped: Passes the HouseContinued as HF 702
- Next: Senate committee
- Next: Passes the Senate
- Next: To the Governor
- Next: Signed into law
Became HF 702 → Its progress continues under the new number. Go to HF 702 What’s a funnel?
What’s in it
AI summary Iowa would expand its annual sales tax holiday to include emergency preparedness supplies alongside clothing. Most items must cost less than $100 to be tax-free, but generators can cost up to $5,000 with a limit of one per household. This change also extends the holiday by one day, making it run from Friday through Sunday in August.1
Read the official explanation
This bill modifies the sales tax holiday. The bill adds the purchase of emergency preparedness supplies to the existing sales tax holiday for clothing. As with an article of clothing, an emergency preparedness supply item must be under $100 to qualify for the sales tax holiday, except for generators and other specified items which qualify if the sales price does not exceed $5,000. The bill limits the purchase of a portable or permanent generator to one such item per household per sales tax holiday period. The bill defines “emergency preparedness supplies” to mean a collection of basic household items needed in the event of an emergency and includes a list of the items. The bill lengthens the sales tax holiday from the period beginning on the first Friday of August and ending at midnight the following Saturday to the period beginning on the first Friday of August and ending at midnight on the following Sunday.
House subcommittee
Named January 18, 2023. On January 25, 2023 it recommended amendment and passage. Vote Total: 2-0.
Three legislators hear a bill first and recommend what the committee should do; it’s the best time to weigh in. How to take part
Fiscal note
AI summary This bill expands the Iowa sales tax holiday to include disaster preparedness supplies and adds Sunday as an extra day for the holiday. It is estimated to reduce revenues for the state's General Fund, the SAVE Fund, and local option sales tax (LOST) distributions. The estimated reductions to the General Fund are $2.7 million in fiscal year 2024, $2.7 million in fiscal year 2025, $2.8 million in fiscal year 2026, $2.8 million in fiscal year 2027, and $2.9 million in fiscal year 2028.3
Read the fiscal note
Description
House File 702 expands the Iowa sales tax holiday to include the purchase of disaster preparedness supplies, which are defined as items that may be used in preparation for or response to a disaster and include general supplies, fastening supplies, food-related supplies, and safety supplies. A disaster preparedness supply item must be under $100 to qualify for the sales tax holiday. However, the Bill provides an exception for general supplies and fastening supplies, for which the maximum allowed sales price is increased to $5,000. The Bill also expands the existing sales tax holiday by one additional day to include Sunday.
Background
The State currently has an annual sales tax holiday held on the first Friday and Saturday of August. During this period, clothing and footwear that meet certain criteria are exempt from sales tax and local option sales tax (LOST). The exemption does not apply to any item selling for $100 or more. The Department of Revenue estimates the amount of sales tax exempted in FY 2023 during the sales tax holiday was approximately $4.7 million.
Alabama, Virginia, and Texas currently have a sales tax holiday for certain emergency preparedness supplies.
Assumptions
- The Bill is effective beginning July 1, 2023 (FY 2024), and would apply to the August 2023 sales tax holiday.
- The average cost of emergency items for a family is $350.
- Approximately 14,800 families will purchase emergency preparedness supplies during the sales tax holiday.
- Without a limit on the number of higher-priced items allowed to be purchased by households, an estimated additional $100,000 will be spent on the higher-priced items during the sales tax holiday in FY 2024.
- Growth trends in future fiscal years are based on Consumer Price Index for all Urban Consumers (CPI-U) average estimated increases of 2.0% from FY 2024 to FY 2028.
- As a result of the number of days in the sales tax holiday increasing from two days to three days, the estimated fiscal impact will increase proportionally by 50.0% to account for the additional day of exempted sales. According to the Department of Revenue, the estimated cost in FY 2023 for the current sales tax holiday was $4.7 million.
- Secure an Advanced Vision for Education (SAVE) refunds are 1.0% of taxable expenditures. LOST distributions are estimated to be 0.097% of taxable expenditures.
Fiscal Impact
House File 702 would reduce revenues to the General Fund, SAVE Fund, and LOST by the estimated amounts listed below.
Sources
- Department of Revenue
- LSA analysis and calculations
- Sales Tax Exemption, Emergency Goods · April 11, 2023
Family tree
Tried before
Earlier and later bills are matched by wording or an identical title.
Tried before
This idea has been filed in an earlier General Assembly. None got through a chamber.
- HF 2563 Modifying the sales tax holiday89th General Assembly · In committee · nearly identicalCleared committee
- HF 680 Modifying the sales tax holiday to include emergency preparedness supplies89th General Assembly · Subcommittee recommends passage · similarCleared committee
Matched by wording or an identical title.