Everybody pays it, but do you really know what you are paying for and where your money goes? In 1992 Iowa sales and use tax was increased to five percent to be applied to the sale of all tangible goods, except groceries and prescription drugs. All of the five percent sales tax revenue goes to the State of Iowa General Fund. A comparable use tax should apply to all goods sold in Iowa from outside the state, but many Internet companies have expected their customers to pay the use tax, but they do not. That will be changing. Amazon will begin paying Iowa Use Tax.