Exempting the sale of laundry soap or detergent from the sales tax

Description

House File 1022 exempts the sale of laundry soap and laundry detergent from the sales and use tax.

Assumptions

• The Bill is effective July 1, 2025 (FY 2026).
• Iowa’s population is 0.96% of the U.S. population.
• The quantity of soaps and detergents purchased by each household is the same.
• The average number of people in each Iowa household is the same as the average number of people in each national household.
• Business expenditures on laundry soap and laundry detergent are assumed to be 10.0% of household expenditures on laundry soap and laundry detergent.
• Expenditures on laundry soap and laundry detergent are assumed to represent 75.0% of expenditures on laundry and cleaning products.
• The cost of laundry soap and laundry detergent in Iowa is assumed to be 88.8% of the national average.
• The value of purchases of laundry soap and laundry detergent is assumed to increase by 2.0% annually.
• Secure an Advanced Vision for Education (SAVE) refunds are 1.0% of taxable expenditures. Local Option Sales Tax (LOST) distributions are estimated to be 0.97% of taxable expenditures.

Fiscal Impact

House File 1022 is estimated to decrease annual revenues to the General Fund, the SAVE Fund, and the LOST by the amounts in Figure 1.

Figure 1 — Fiscal Impact of HF 1022 (in Millions)

Sources

• Iowa Department of Revenue
• Bureau of Economic Analysis
• Bureau of Labor Statistics
• United States Census BureauGeneral Fund SAVE LOST
• FY 2026 -9.7$ -1.9$ -1.9$
• FY 2027 -9.8 -2.0 -1.9
• FY 2028 -10.0 -2.0 -1.9
• FY 2029 -10.2 -2.0 -2.0
• FY 2030 -10.5 -2.1 -2.0