On the Ballot November 4:
A local option sales and services tax shall be imposed in the City of Iowa City, Iowa at the rate of one percent (1%) to be effective on July 1, 2026.
Revenues from the sales and services tax shall be allocated as follows:
50% for property tax relief;
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The specific purposes for which the revenues shall otherwise be expended are:
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25% to preserve existing affordable housing stock, increase shelter, transitional, and permanent housing supports, and increase access to and the supply of affordable housing for households with low incomes.
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10% for maintenance and construction of public streets, sidewalks, trails, parks, and facilities as designated by City Council.
15% for community partnerships, including, but not limited to, partnerships that support intergovernmental, economic development, arts and culture, and social service priorities as designated by City Council.
What is a
Local Option Sales Tax (LOST)?
Often shortened as "LOST" or called a "penny tax," a local option sales tax is simply an extra 1% sales tax added to some purchases. Just like sales tax, purchases of unprepared food for human consumption (groceries), gasoline, and utilities will not include the local option sales tax. 50% of the tax received will be for property tax relief.
Iowa City is Worth Every Penny
State law requires that half of local option sales tax revenue must go toward property tax relief. Guided by community feedback and the City’s strategic plan, the Iowa City Council has identified the following priorities for the remaining half of the revenue:
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Affordable housing
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Public infrastructure & facilities
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Community partnerships
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Affordable Housing
One-third of households in Johnson County spend more than 30% of their income on housing-related expenses, leaving them limited resources for other essential needs. People's access to housing is the foundation of opportunity in all other aspects of their lives with implications for their health, employment, and education.
Stable, affordable homes strengthen Iowa City for everyone—workers, families, seniors, and local businesses alike. A local option sales tax will provide a consistent, dedicated funding stream that allows the City to address our community’s housing needs responsibly and proactively.
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Public Infrastructure & Facilities
Safe, well-maintained infrastructure and facilities are the backbone of a thriving community. Investments in public streets, sidewalks, parks, trails, and public facilities improve the quality of life for residents and visitors alike, while supporting future growth. Local options sales tax offers an alternative to property taxes for funding these essential improvements, and more evenly shares the costs between those who live here and those who visit.
Community Partnerships
Iowa City has a long history of collaborating with local nonprofit and governmental partners to serve residents and strengthen our community, especially our most vulnerable. Revenue from a local option sales tax will help sustain and expand support for our social service, arts and culture, and economic development partners while allowing other innovative collaborations that help make Iowa City a vibrant, welcoming place.
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Property Tax Relief
Since 2019, state law requires any city that passes a local option sales tax to designate 50% of the revenue for property tax relief. In Iowa City, this property tax relief will be achieved by directly reducing property tax rates and/or preventing increases to property tax rates that would otherwise be necessary to help fund critical infrastructure and public services. City Council will determine how property tax relief is provided each year during the City’s annual budget process.
Vote Yes on November 4
These aren’t “wish list” items – they are critical investments in identified needs that will directly benefit our community. Visitors spend millions of dollars in Iowa City every year, and a local option sales tax helps ensure a portion of that helps fund vital, local projects and programs.
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Vote Yes for local option sales tax on November 4.
FAQ's for Iowa City
What is a local option sales tax?
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A local option sales tax is a funding mechanism for cities in Iowa to help pay for projects, initiatives, and property tax relief. The tax is one cent per dollar spent on most sales and services, with some exceptions. The 6% sales tax that is currently collected at stores and restaurants in Iowa City is retained by the State of Iowa.
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Who pays the tax?
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If approved, anyone who shops in Iowa City will contribute, including non-residents and visitors.
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Do any other cities in Iowa have a local option sales tax?
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Yes, 93% of cities in Iowa have a voter-approved local option sales tax. This includes several cities in Johnson County. Iowa City residents pay a local option sales tax when visiting Cedar Rapids, Davenport, Des Moines, and most other cities in Iowa.
What about North Liberty and Coralville?
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Voters in North Liberty and Coralville will also have the opportunity to approve a local option sales tax on November 4. Each city has unique ballot language and would use tax revenues differently based on their priorities. Each city’s voters will determine whether the tax is collected in their community.
How much revenue will be collected?
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Local option sales tax revenue collected in Iowa City will be distributed among all cities in Johnson County that approve the tax. The distribution among the cities is based on a formula set by the state. Estimates of Iowa City’s share of the tax range from $8 million to $10 million annually, depending on the number of cities that pass the tax.
When will the tax be collected?
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If approved, collection of the one-cent tax will begin July 1, 2026.
What is taxed?
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Sales and services are taxed, with the exception of utilities, groceries, prescription medications, medical devices, industrial machinery, vehicle registration, educational materials, construction services, and internet access services.
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When and where can I vote?
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Vote during the regular city and school election on Tuesday, November 4, at regular polling places from 7:00 am to 8:00 pm. To learn about early voting by mail or in person, or find your polling place, call the Johnson County Auditor at 319.356.6004 or visit https://www.johnsoncountyiowa.gov/auditor/elections
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