Providing a sales tax exemption for the furnishing of parking facilities services

Description

House File 996 exempts the sales price of parking facility services from the sales and use tax.

Background

Under current law, the sales price of parking facility services provided by cities or counties is exempt from the sales and use tax. Parking services provided by private entities are taxable. A parking facility is defined in 701 IAC 211.12 as any place that is used for parking a vehicle for consideration.

Assumptions

• The Bill takes effect July 1, 2025 (FY 2026).
• According to U.S. Census Bureau data, total sales of parking lot and garage services in Iowa subject to federal income tax equaled $13.9 million in calendar year (CY) 2022.
• Taxable sales of parking facility services are 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 996 is estimated to reduce annual revenues to the General Fund, the SAVE Fund, and the LOST by the amounts in Figure 1.

Figure 1 — Fiscal Impact of HF 996General Fund SAVE LOST FY 2026 -755,000$ -151,000$ -146,000$ FY 2027 -770,000 -154,000 -149,000 FY 2028 -785,000 -157,000 -152,000 FY 2029 -801,000 -160,000 -155,000 FY 2030 -817,000 -163,000 -158,000

Sources

• Iowa Department of Revenue
• U.S. Census Bureau
• LSA calculations