Bills › 91st General Assembly
Relating to the sales tax exemption for the purchase of central office equipment or transmission equipment used by certain entities primarily in the furnishing of telecommunications services on a commercial basis
Topics:Business & economyTaxes
Where it is now
- Done: IntroducedMarch 6, 2025
- Done: SubcommitteeMarch 7, 2025
- Done: Senate committeeApril 21, 2025
- Skipped: Passes the SenateContinued as SF 636
- Skipped: House committee
- Done: Passes the HouseApril 21, 2025
- Next: To the Governor
- Next: Signed into law
Became SF 636 → Its progress continues under the new number. Go to SF 636 What’s a funnel?
What’s in it
AI summary Companies that provide telecommunications services would no longer have to pay sales or use tax on certain equipment used to run their networks. Currently, the tax break only applies if the equipment is used primarily for these services, but this change would cover all such equipment purchases.1
Read the official explanation
This bill relates to the sales tax exemption for the purchase of central office equipment or transmission equipment used by certain entities in the furnishing of telecommunications services on a commercial basis. The bill expands the sales tax exemption for the purchase of central office equipment or transmission equipment by striking the term “primarily” and making all such purchases used in the furnishing of telecommunications services exempt from sales tax. Code section 423.3(47A) defines the terms “central office equipment” and “transmission equipment”. By operation of Code section 423.6, an item exempt from the imposition of the sales tax is also exempt from the use tax imposed in Code section 423.5.
Changed since by amendment S-5183; see Amendments.
Senate subcommittee
Named March 7, 2025. On March 25, 2025 it recommended passage.
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 sales and use tax exemptions for certain equipment used to provide telecommunications and internet services. Starting in fiscal year 2027, it is estimated to decrease annual revenue for the state's General Fund by $0.9 million, the SAVE Fund by $0.2 million, and the LOST fund by $0.2 million.3
Read the fiscal note
Description
House File 960 expands the sales and use tax exemption in Iowa Code section 423.3(47A)(a) by making all purchases of central office equipment or transmission equipment used by certain entities in the furnishing of telecommunications services and internet access services on a commercial basis exempt from sales and use tax.
Background
Under current law, a sales tax exemption is available only for central office equipment or transmission equipment primarily used by local exchange carriers and competitive local exchange service providers; by franchised cable television operators, mutual companies, municipal utilities, cooperatives, and certain communications services companies; by long distance companies; or for a commercial mobile radio service in the furnishing of telecommunications services on a commercial basis.
“Central office equipment” is defined as equipment utilized in the initiating, processing, amplifying, switching, or monitoring of telecommunications services. Central office equipment also includes ancillary equipment and apparatus that support, regulate, control, repair, test, or enable such equipment to accomplish its function.
“Transmission equipment” is defined as equipment utilized in the process of sending information from one location to another location. Transmission equipment also includes ancillary equipment and apparatus that support, regulate, control, repair, test, or enable such equipment to accomplish its function.
Assumptions
- The Bill is effective July 1, 2026 (FY 2027).
- There are 116 telecommunications providers affected by the Bill.
- Estimated taxable expenditures made exempt by the Bill are based on appeals information filed with the Iowa Department of Revenue related to the sales tax exemption in Iowa Code section 423.3(47A)(a) and scaled to include all telecommunications and internet access providers in the State.
- The amount of taxable sales for FY 2025 that would be made exempt under the Bill is $16.4 million.
- The estimated value of purchases made exempt under the Bill will increase by 2.4% 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 0.95% of taxable expenditures.
Fiscal Impact
House File 960 is estimated to decrease annual revenue to the General Fund, the SAVE Fund, and the LOST by the amounts in Figure 1.
Figure 1 — Fiscal Impact of House File 960 (in Millions)
General Fund SAVE LOST
FY 2027 $ -0.9 $ -0.2 $ -0.2 FY 2028 -0.9 -0.2 -0.2 FY 2029 -0.9 -0.2 -0.2 FY 2030 -0.9 -0.2 -0.2 FY 2031 -0.9 -0.2 -0.2
Sources
- Iowa Department of Revenue
- Iowa Communications Alliance
- Legislative Services Agency calculations
- Final Fiscal Note — Communications Network Equipment Sales Tax Exemption · May 13, 2026
- Communications Network Equipment Sales Tax Exemption · April 20, 2026
- Communications Network Equipment Sales Tax Exemption · April 15, 2026
- Communications Network Equipment Sales Tax Exemption · April 28, 2025
- Communications Network Equipment Sales Tax Exemption · March 24, 2025
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91st General Assembly
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 became law, though one got through a chamber.
- HF 2635 Relating to the sales tax exemption for the purchase of central office equipment or transm…90th General Assembly · Passed House · same titlePassed a chamber
Similar bills this General Assembly
- HSB 126 Relating to the sales tax exemption for the purchase of central office equipment or transm…91st General Assembly · In committeeNearly identical
Matched by wording or an identical title.