Fiscal Note
Fiscal Services Division
SF 601 – Sales Tax Exemption, Food Banks (LSB2808SV)
Staff Contact: Lora Vargason (515.725.2249) lora.vargason@legis.iowa.gov
Fiscal Note Version – New
Description
Senate File 601 exempts from the sales tax and use tax the purchase price from the sale or
rental of tangible personal property or services furnished to a nonprofit food bank if the property
or services are to be used by the nonprofit food bank for a charitable purpose. The exemption
does not include specified digital products.
Background
A nonprofit food bank is defined as an organization under Iowa Code chapter 504 and qualifying
under Section 501(c)(3) of the Internal Revenue Code as an organization exempt from federal
income tax that maintains an established operation involving the provision of food or edible
commodities or the products thereof on a regular basis to persons in need or to food pantries,
soup kitchens, hunger relief centers, or other food or feeding centers that, as an integral part of
their normal activities, provide meals or food on a regular basis to persons in need.
Six major food banks serve Iowa as part of the Iowa Food Bank Association:
• River Bend Food Bank (includes St. Stephen’s Food Bank)
• Northeast Food Bank
• Food Bank of Siouxland
• HACAP Food Reservoir (includes Linn Community Food Bank)
• Food Bank for the Heartland
• Food Bank of Iowa (merged with Food Bank of Southern Iowa)
In addition, there are 57 smaller food banks across the State.
Assumptions
• Of the six major food banks that serve Iowa, two would not be included in this new
exemption. One is based in Omaha (Food Bank for the Heartland) and is assumed to not
make significant purchases subject to Iowa sales/use tax. Another (Hawkeye Area
Community Action Program) already qualifies for a sales/use tax exemption as a community
action agency under Iowa Code section 423.3(79).
• From information provided by the Iowa Food Bank Association, it is estimated that FY 2019
purchases that would qualify for the sales/use tax exemption were $3.1 million.
• An estimated 57 additional smaller food banks and food pantries will qualify under the Bill.
These entities are estimated to represent 5.0% of total purchases of all qualifying entries.
• Growth trends in future fiscal years are based on Consumer Price Index Urban (CPI-U)
average estimated increases of 2.34% from FY 2019 to FY 2026.
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Fiscal Impact
Senate File 601 will reduce revenues to the General Fund, Secure an Advanced Vision for
Education (SAVE) Fund, and local option sales tax (LOST) by the estimated amounts listed
below.
Estimated Revenue Reduction of SF 601
General Fund SAVE LOST
FY 2022 $ 170,000 $ 34,000 $ 33,000
FY 2023 174,000 35,000 34,000
FY 2024 178,000 36,000 35,000
FY 2025 182,000 36,000 35,000
FY 2026 186,000 37,000 36,000
Sources
Department of Revenue
Iowa Food Bank Association
LSA analysis and calculations
/s/ Holly M. Lyons
April 21, 2021
Doc ID 1219678
The fiscal note for this Bill was prepared pursuant to Joint Rule 17 and the Iowa Code. Data used in
developing this fiscal note is available from the Fiscal Services Division of the Legislative Services
Agency upon request.
www.legis.iowa.gov
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Statutes affected:
Introduced: 423.3