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Sales taxes account for 44% of growth in overall Iowa tax receipts

DES MOINES — The amount of taxes paid to the State of Iowa continued to grow over the past six months, fueled in part from state sales taxes on electronic commerce — like online shopping and streaming services like Netflix. Net tax payments to the state last month were up more than 5% over the previous December.

“A $27 million increase in corporate income tax deposits and a $19 million decrease in overall tax refunds issued provided much of the month’s net revenue boost,” says Jeff Robinson, senior fiscal analyst for the Legislative Services Agency.

Over the past six months, total state tax revenue increased $117 million and 44% of that was due to an increase in sales tax collections. The rest of the increase came mainly from an increase in corporate income taxes.

“Growth in net individual income tax revenue for the fiscal year has been just $16 million or 0.9%,” Robinson says.

The State of Iowa began taxing internet purchases on January 1, 2019. Federal reports indicate online sales accounted for 14% of all retail activity in the third quarter and early estimates indicate online shopping skyrocketed during November and December.

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