Iowa Payroll Compliance
Every rate, wage base, and threshold Iowa employers need for 2026 — sourced from the Dept. of Revenue and Iowa Workforce Development — including the most dramatic SUI overhaul of any state this year, cutting the taxable wage base nearly in half.
Minimum Wage & Hours
Iowa’s minimum wage matches the federal floor of $7.25/hour with no state-level increase enacted or scheduled. No Iowa city or county sets its own minimum wage.
| Item | 2026 Value | Notes |
|---|---|---|
| State minimum wage | $7.25/hr | Matches the federal FLSA floor |
| Overtime rule | 40 hrs/week | Federal FLSA; no separate state overtime rule |
| Local wage ordinances | Preempted | Iowa law bars cities and counties from setting a higher local minimum wage |
State Income Tax Withholding
Iowa completed its transition to a flat 3.8% income tax rate, replacing what was previously one of the country's more complex graduated systems. No local income tax exists anywhere in the state.
| Item | 2026 Value | Notes |
|---|---|---|
| Flat withholding rate | 3.8% | Same rate at every income level |
| Required certificate | Form IA W-4 | Iowa-specific |
| Local income tax | None | No Iowa city or county imposes one |
Unemployment Insurance (SUI)
Governor Kim Reynolds signed Senate File 607 on June 5, 2025, dramatically simplifying Iowa's UI tax structure. The result for 2026: a taxable wage base nearly cut in half, from $39,500 to $20,400, alongside a maximum employer rate cut from 9% to 5.4%. This is one of the most significant single-year SUI overhauls of any state this decade.
| Item | 2026 Value | Notes |
|---|---|---|
| SUI taxable wage base | $20,400 | Down from $39,500 in 2025 — a 48% reduction, per Senate File 607 |
| Maximum employer rate | 5.4% | Down from 9% under the prior rate table structure |
| New employer rate | Simplified table | SF 607 consolidated Iowa's UI tax tables; confirm current entry rate via IWD |
| Enacting legislation | Senate File 607 (2025) | Signed June 5, 2025; effective for tax year 2026 |
| Administering agency | Iowa Workforce Development | Quarterly filing, same schedule as most states |