Iowa City, IA Hotels & Lodging: Transient Occupancy Tax (2026)

Iowa's hotel/motel tax framework is unusually centralized. (1) Iowa Code §423A.3 imposes a 5% state hotel and motel tax on the gross receipts from renting any sleeping accommodation (room, lodging, or campground site) for periods of 31 consecutive days or less. The tax base includes hotels, motels, inns, B&Bs, tourist courts, and short-term residential rentals. (2) Iowa Code §423A.4 authorizes any city or county to impose a local hotel and motel tax of up to 7% on the same base by ordinance and election. Iowa City has adopted the statutory maximum 7% local rate, and the Iowa Department of Revenue collects, audits, and remits the local share back to Iowa City quarterly. Johnson County does not impose a separate county hotel tax inside Iowa City corporate limits because §423A.4 allows a city OR county tax, not both. Combined rate in Iowa City is 12% (5% state + 7% local). Iowa Code §423A.5 exempts stays of more than 31 consecutive days by the same person, room rentals of less than $150 per quarter (de minimis), certain governmental and 501(c)(3) educational stays paid directly by the exempt entity, and University of Iowa stays paid directly by the university for student or official use. Operators register on GovConnectIowa, file quarterly (or monthly if high volume) on the Iowa Hotel and Motel Tax Return, and remit electronically. Airbnb has a statewide voluntary collection agreement with Iowa covering both the 5% state and the 7% local tax; VRBO and direct bookings remain the host's responsibility. Note: Iowa's state sales tax under §423.2 and local-option sales tax (LOST) do NOT stack on top of the hotel tax because §423A is the exclusive lodging tax.