Iowa Modernises Its Telecom Exemption to Capture Broadband Infrastructure

Iowa has updated its sales-tax treatment of communications infrastructure with House File 960, signed into law on 19 May 2026 and effective 1 July 2026. Under prior law, Iowa Code §423.3(47A)(a) exempted central-office and transmission equipment only where “primarily” used by traditional carriers—local exchange and competitive carriers, cable operators, municipal utilities, cooperatives, long-distance companies and commercial mobile radio providers—to furnish telecommunications services. As fiber, cable and wireless networks increasingly deliver voice, video and data over the same infrastructure, equipment used for internet access was not clearly covered, leaving providers exposed to tax on broadband infrastructure. HF 960 removes “primarily” and extends the exemption to equipment used to furnish telecommunications services, internet access services, or a combination of the two, on a commercial basis. The Legislative Services Agency estimates 116 affected providers and about US$16.4m of formerly taxable purchases made exempt, with corresponding reductions to the General Fund, the SAVE fund and local-option sales tax.