At a glance
- Corporate tax
- 5.5% / 7.1% above $100,000
- Tax on wages
- 3.8% flat
- Sales tax
- 6% + local option
- Economic nexus
- $100,000 in gross revenue
- Minimum wage
- $7.25/hr
- UI wage base
- $20,400
- New-employer UI rate
- 1.0%
- Paid leave program
- None
- Annual report
- Biennial, Apr 1 of even years, $60
2026 figures, each explained with its source on the area’s page. On top of the federal baseline.
Setup, in order
Register the corporation
Before doing business in IowaFile a Foreign Registration Statement with the Secretary of State ($100) and appoint an Iowa registered agent.
Open an Iowa withholding account
Before the first Iowa payrollRegister for a withholding permit through GovConnectIowa; employees complete the IA W-4.
Register for unemployment insurance
When the first Iowa employee is hiredRegister with Iowa Workforce Development; new non-construction employers pay 1.0% on the first $20,400 in 2026.
Report new hires
Within 15 days of hireReport each hire and rehire to the Centralized Employee Registry.
Buy workers’ compensation insurance
Before the first employee startsRequired for employees under Iowa law.
Get a sales tax permit
When nexus is reachedRegister through GovConnectIowa once Iowa revenue — exempt sales included — reaches $100,000, and collect exemption certificates from commercial customers.
Calendar the biennial report
April 1 of the next even yearProfit corporations file in even-numbered years, Jan 1 to Apr 1, $60.
The six areas
- AccountingAccounting and state tax in IowaIowa taxes corporations at 5.5% on the first $100,000 and 7.1% above for 2026, apportions by a single sales factor, and follows the federal code on a rolling basis.Corporate rate, first $100,0005.5%
- ReceivablesReceivables and sales tax in IowaIowa taxes SaaS but exempts it for commercial enterprises, so B2B sellers collect certificates rather than tax. Nexus is $100,000 of all Iowa revenue, exempt sales included.State sales tax rate6%
- PayablesPayables and contractors in IowaIowa wants 1099s only when they show Iowa withholding, filed electronically by February 15. Business SaaS purchases are generally exempt; computers are not.1099s to IowaOnly with Iowa withholding
- PayrollPayroll taxes and employer rules in IowaIowa withholds a flat 3.8%, cut its 2026 unemployment wage base to $20,400 with a 1.0% new-employer rate, and requires new hires reported within 15 days.State withholding3.8%
- ComplianceCompliance and filings in IowaRegister with the Secretary of State for $100, file a $60 biennial report by April 1 of even years, and file the IA 1120 by April 30. No franchise tax applies.Foreign registration statement$100
- AdvisoryAdvisory: credits and decisions in IowaIowa replaced its Research Activities Credit in 2026 with an IEDA-certified R&D credit of up to 3.5% of Iowa research spending, refundable and capped at $40 million a year. Individuals pay a flat 3.8%.Old research activities creditRepealed 2026
Who you register with
- Iowa Department of Revenue (IDR)Corporation income tax, withholding and sales tax permits through GovConnectIowa
- Iowa Workforce Development (IWD)Unemployment insurance account and quarterly reports
- Iowa Secretary of State — Business ServicesForeign registration statement and biennial report
- Centralized Employee Registry (Child Support Services)New-hire reporting within 15 days
- Iowa Economic Development Authority (IEDA)The application-based R&D credit from 2026
- Iowa Treasurer of State — Great Iowa Treasure HuntUnclaimed property reporting
Hiring across the border
An employee who lives in one state and works in another is the most common way a startup ends up registered in two. These are Iowa’s neighbors.
- MNMinnesota9.8% franchise tax, a new 0.88% Paid Leave premium, and taxable prewritten software
- WIWisconsin7.9% franchise tax on combined income, but no tax on SaaS and a refundable R&D credit
- ILIllinoisA 9.5% combined corporate rate, plus Chicago’s own wage, leave and 15% cloud tax
- MOMissouriFlat 4% corporate rate, no franchise tax, and a 1% earnings tax in KC and St. Louis
- NENebraskaFlat 4.55% corporate tax, a $15 minimum wage, and sick time from the 11th employee
- SDSouth DakotaNo income tax at all, but sales tax on SaaS and services — the Wayfair state
Common questions
Is Iowa’s corporate rate a flat 5.5% now?
Not yet. Iowa law cuts the top corporate rate only when net corporate income tax receipts exceed $700 million in the prior fiscal year. Fiscal 2025 receipts were about $621.2 million, so the Department’s order kept 2026 at 5.5% on the first $100,000 and 7.1% above it. The ratchet continues until every dollar is taxed at 5.5%.
Do I charge Iowa sales tax on SaaS?
It depends on the customer. Iowa taxes software as a service, but exempts it when the buyer is a commercial enterprise using it exclusively in its business. A B2B SaaS company selling only to businesses collects little or no Iowa tax, but it should keep exemption certificates from those customers. A consumer app sold to Iowans is taxable.
Do I file 1099-NEC forms with Iowa?
Only if the form shows Iowa income tax withheld. Iowa bases the requirement on Iowa withholding, not Iowa-source payments, so a normal contractor 1099-NEC with no Iowa withholding is filed with the IRS only.
How fast do I report a new hire in Iowa?
Within 15 days of the hire or rehire, under Iowa Code §252G.3 — five days shorter than the federal default. The report goes to the Centralized Employee Registry and includes the employee’s date of birth and whether dependent health coverage is offered.
How often does Iowa want a report?
Every two years, not every year. Profit corporations — including a qualified Delaware corporation — file in even-numbered years, between January 1 and April 1, with a $60 fee. 2026 was a filing year; the next is 2028.
Can an Iowa startup still get a refundable R&D credit?
Yes, but no longer by computing it on the return. The old Research Activities Credit covers tax years beginning in 2025. For tax years beginning on or after January 1, 2026, SF 657 replaced it with an R&D credit certified by the Iowa Economic Development Authority: up to 3.5% of eligible Iowa research expenses, refundable but not transferable, inside a $40 million statewide cap each fiscal year. It is limited to businesses primarily engaged in advanced manufacturing, bioscience, insurance and finance, or technology innovation; software and technology is one of the listed sectors.
Sources
Checked against each agency’s own page on . Rates and thresholds change, usually on January 1.
- Iowa Department of Revenue — Order on tax year 2026 corporate income tax rates
- Iowa Department of Revenue — 2026 individual income tax and interest rates
- Iowa Department of Revenue — 2025 IA 1120 Corporation Income Tax Return
- Iowa Department of Revenue — 2023 Iowa Corporation Income Tax Instructions
- Iowa Department of Revenue — 2025 Expanded Instructions
- Iowa Department of Revenue — Research Activities Tax Credit Annual Report
- Iowa Department of Revenue — Remote Sellers & Marketplace Facilitators
- Iowa Department of Revenue — Permits, Filing Requirements & Local Option Sales Tax
- Iowa Department of Revenue — Taxation of Specified Digital Products, Software, and Related Services
- Iowa Department of Revenue — File a W-2 or 1099
- Iowa Department of Revenue — Iowa Withholding Tax Information
- Iowa Department of Revenue — Estimated Income Tax Payments for Business Entities
- Iowa Department of Revenue — Filing Frequency & Return Due Dates
- Iowa Workforce Development — Unemployment Insurance Taxes (Employer Handbook)
- Iowa Workforce Development — UI rates to remain at lowest level in 2026
- Iowa Code §252G.3 (2026) — Employer reporting requirements
- Iowa Secretary of State — Business Forms and Fees
- Iowa Legislature — SF 657 (2025)
- Iowa Legislative Services Agency — Fiscal Topics: Research and Development Tax Credit (Nov 2025)
- NAUPA — Iowa reporting profile
- US Department of Labor — State minimum wage laws
General information for US companies, not tax, legal or accounting advice for yours. Rules and thresholds change; confirm the specifics with a CPA or the agency before you act on them.