Ankeny, Iowa Just Voted to Add a Sales Tax — By a Landslide. Here's What Changes January 1

What the Vote Actually Authorized

The ballot language was straightforward. As the City of Ankeny's official local option sales tax page explained, the 1% tax would apply to some retail sales and services in Ankeny — with the revenue split two ways.

Fifty percent goes to property tax relief. Fifty percent goes to capital projects including street improvements, park and trail improvements, recreational facilities, public infrastructure, public safety equipment, public facilities, and debt retirement.

The city projected the tax would generate more than $12 million annually. Polk County's local option sales tax fund paid out more than $99.7 million to Polk County cities in fiscal year 2025 — with Ankeny having contributed to other cities' shares while collecting nothing itself. That dynamic — Ankeny shoppers funding other cities' projects while Ankeny got nothing back — was central to the yes campaign's argument.

What's Exempt

Not everything gets taxed at the higher rate. Daily necessities are explicitly excluded from Iowa's local option sales tax. Groceries, rent, gasoline, prescription medications, and vehicles are all exempt from the increase.

Iowa's statewide 6% sales tax already exempts these categories — and the local option layer follows the same exemption rules. A family buying groceries at an Ankeny Hy-Vee pays the same rate after January 1 as they did before. A family buying electronics, clothing, or restaurant meals pays 7% instead of 6%.

Iowa's Local Option Sales Tax — How the System Works

Ankeny's vote fits into a broader Iowa framework worth understanding — both for the context it provides and because the Polk County distribution model affects every business and government in the county.

As North Iowa Today's election preview explained, approximately 99.5% of Iowa's more than 940 incorporated cities already impose the local option tax. Ankeny was one of only five holdouts and the only one in Polk County.

Iowa's local option sales tax is technically a countywide revenue-sharing system. All local option sales tax money collected in Polk County goes into a single fund, which is then distributed among jurisdictions that have a local option sales tax based on population and property tax levies. With Ankeny now in the fund, the distribution formula shifts — and other Polk County cities that have been collecting local option tax alongside Ankeny residents' spending will see their shares recalculate accordingly.

Iowa City, Coralville, North Liberty, and two smaller Johnson County communities are among the most recent additions to the state's local option tax roster — their voter-approved taxes took effect July 1, 2026. Ankeny joins that list with a January 1, 2027 effective date.

The Property Tax Connection

The property tax argument was central to Ankeny's yes campaign — and the math behind it is worth understanding for any Ankeny homeowner or business property owner.

Ankeny has the lowest property tax rate in the Des Moines metro. That sounds like an advantage — but as the real estate analysis at Jill Budden Homes pointed out ahead of the vote, a lower rate isn't a sign of lighter city spending or a leaner government. It's a sign of a narrower funding base. Ankeny collects less revenue per dollar of assessed value because it has fewer tools to collect it from.

If voters approved the local option sales tax — which they did — city leaders projected roughly a 6% decrease in property taxes. That trade is the core of the local option sales tax argument everywhere it's used: shift some of the funding burden from property owners to a broader pool of consumers, including the visitors and commuters who use Ankeny's roads and services without contributing to its tax base.

Whether that property tax relief actually materializes in the amounts projected will be one of the things Ankeny voters watch closely heading into 2027 and 2028.

What Businesses in Ankeny Need to Do Before January 1

The vote is done. The result is unofficial but decisive — 64% in favor. The compliance clock starts now.

The tax takes effect January 1, 2027 — giving businesses approximately 115 days to prepare.

Physical retailers in Ankeny need to update their POS systems before the first transaction of January 1, 2027. The new combined rate is 7% on all taxable transactions — Iowa's 6% statewide rate plus the new 1% local option layer. The rate applies to the same categories currently subject to Iowa's statewide tax. Exempt categories — groceries, rent, gas, prescription medications, vehicles — remain exempt under the local option tax as well.

Ecommerce sellers shipping taxable goods to Ankeny addresses need to verify their tax software updates for the new Ankeny rate on January 1. Iowa's economic nexus threshold is $100,000 in annual Iowa sales — remote sellers crossing that threshold are required to collect and remit Iowa sales tax, including any applicable local option tax. A seller currently collecting 6% on Ankeny deliveries needs to collect 7% from January 1.

The Iowa Department of Revenue will publish updated rate tables for Ankeny as part of its January 1, 2027 rate cycle. That's the authoritative source for the final confirmed rate — verify before your first January transaction rather than relying on current rate tables.

The Third Time Was the Charm

Ankeny's vote tonight closes a chapter that started in 2018.

The 2018 rejection came at 53% against. The 2024 City Council vote against even holding the election suggested the political environment still wasn't right. And tonight, 64% of voters said yes.

What the eight-year gap illustrates is something we've seen in local sales tax votes all year — from Fargo's 73% approval of a 22-year extension, to LA County's 50.35% squeaker, to Contra Costa County's rejection, to Salina and Tahlequah's quiet approvals. Voter appetite for sales tax measures isn't fixed. It responds to financial pressure, to the specificity of the project list, to whether residents feel they're getting something concrete in return, and to the broader economic environment.

In 2018, Ankeny voters said no. In 2026, after state property tax reform squeezed city revenues and infrastructure costs kept climbing, they said yes by nearly 2 to 1.

Not sure how Ankeny's new 7% rate affects your compliance obligations starting January 1, 2027 — or whether other Iowa local option tax changes have affected your ecommerce delivery rates? Book a free consultation with our team at sales.tax. We'll review your Iowa footprint and make sure your rates reflect every local option tax change across the state heading into 2027.