Key figures
Iowa payroll
2026, with sources
Withholding at a flat 3.8%
Iowa individual income tax is a flat 3.8% for 2026, so withholding is simple: register for a withholding permit through GovConnectIowa, collect the Iowa W-4 (IA W-4) from each employee within 15 days of hire, and deposit and file on the schedule the Department assigns. An employee who does not turn in an IA W-4 is withheld at zero allowances, and the forms are kept for at least four years. Supplemental wages are withheld at 3.8% when federal withholding uses the flat method.
The schedule follows the tax withheld. Under $6,000 a year, the employer files and pays quarterly, by the last day of the month after the quarter. From $6,000 to $120,000, deposits for the first two months of a quarter are due by the 15th of the next month, with the quarterly return covering the third. Above $120,000, deposits are semimonthly. Iowa and Illinois have a reciprocal agreement: an Illinois resident working in Iowa who files form 44-016 with the employer is taxed on those wages only by Illinois.
Iowa has no city or county payroll taxes for employers to withhold. The school district surtax is computed on the employee’s own Iowa return, not through payroll.
Unemployment insurance got cheaper in 2026
SF 607 (2025) rewrote Iowa’s unemployment tax tables and cut the maximum rate to 5.4%. For 2026 the taxable wage base is $20,400, down from $39,500, and IWD is on Table D, the lowest table allowed by law. A new non-construction employer pays 1.0%.
Take a startup that hires two engineers in Iowa City at $120,000 each: 2026 state unemployment tax is 1.0% of $20,400 per person, $204 each, against $395 each in 2025.
Minimum wage, new hires and leave
Iowa’s minimum wage is $7.25, the federal rate, and state law prevents cities and counties from setting a higher one. There is no state paid sick leave or paid family leave program. New hires must be reported to the Centralized Employee Registry within 15 days — the detail most multistate payroll setups miss. Workers’ compensation insurance is required for employees.
Deadlines
- Quarterly, last day of the month after the quarterWithholding return through GovConnectIowa (all filers)
- 15th of the following monthWithholding deposit for monthly filers ($6,000–$120,000 a year), first two months of each quarter
- Last day of the month after the quarterQuarterly UI contribution and wage report to IWD
- Within 15 days of hireNew-hire report to the Centralized Employee Registry
The federal baseline
This page covers what Iowa adds. The federal rules underneath it apply here too.
Common questions
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.
Why did Iowa’s unemployment wage base drop so much?
SF 607, signed in 2025, changed the formula from two-thirds to one-third of the state’s average annual wage. The 2026 base fell from $39,500 to $20,400, and IWD is using Table D, the lowest rate table allowed. A new non-construction employer pays 1.0% on that base.
Payroll next door
- MNMinnesota payrollMinnesota added a 0.88% Paid Leave premium in 2026 (0.66% for small employers), charges UI on the first $44,000, requires earned sick and safe time and sets a $11.41 minimum wage.
- WIWisconsin payrollWisconsin withholds by bracket, charges new employers 3.05% UI on the first $14,000, keeps a $7.25 minimum wage, has no paid leave program and requires workers’ comp early.
- ILIllinois payrollIllinois withholds a flat 4.95%, charges UI on the first $14,250, and requires 40 hours of paid leave — or Chicago’s 40 plus 40, at Chicago’s higher minimum wage.
- MOMissouri payrollMissouri’s 2026 minimum wage is $15.00 with no inflation indexing after HB 567, and the Prop A sick leave mandate is gone. Kansas City and St. Louis add a 1% earnings tax.
- NENebraska payrollNebraska’s minimum wage is $15.00 in 2026 and rises 1.75% a year from 2027. Paid sick time applies at 11 employees, and new employers pay 1.25% on $9,000.
- SDSouth Dakota payrollNo state withholding and no paid leave program. A new employer pays 1.20% Reemployment Assistance tax plus a 0.55% investment fee on the first $15,000 of wages.
How Iowa compares
- No tax on wagesStates with no state income tax on wagesIowa: withholds state income tax. 9 of 51 states are on the list.
- Paid leave payrollStates with a paid leave or disability payroll programIowa: no state program. 16 of 51 states are on the list.
- Local payroll taxStates with city, county or district payroll taxesIowa: state-level only. 14 of 51 states are on the list.
Founder guides on this
- PeopleContractor or employee? Classification for startupsContractor or employee depends on control, not the contract. The IRS test, state rules, 1099s, payroll registration and the cost of getting it wrong.
- ComplianceFirst-year compliance calendar for a Delaware C-corpDelaware franchise tax, 1099s, the federal return, payroll filings, state annual reports and sales tax: the deadlines a young C-corp misses most, by month.
More of the Iowa guide
- AccountingAccounting and state tax in IowaCorporate tax, conformity to federal rules, apportionment and what it does to your books
- ReceivablesReceivables and sales tax in IowaSales tax registration, economic nexus, whether SaaS is taxable, and collecting from customers
- PayablesPayables and contractors in IowaPaying vendors and contractors: 1099 filing, use tax, contractor tests and withholding
- ComplianceCompliance and filings in IowaRegistering to do business, annual reports, franchise tax and the filing calendar
- AdvisoryAdvisory: credits and decisions in IowaCredits, incentives and the decisions that are cheaper to get right the first time
Sources
Checked against each agency’s own page on . Rates and thresholds change, usually on January 1.
- Iowa Department of Revenue — 2026 individual income tax and interest rates
- Iowa Workforce Development — Unemployment Insurance Taxes (Employer Handbook)
- Iowa Workforce Development — UI rates to remain at lowest level in 2026
- US Department of Labor — State minimum wage laws
- Iowa Code §252G.3 (2026) — Employer reporting requirements
- Iowa Department of Revenue — Filing Frequency & Return Due Dates
- Iowa Department of Revenue — Iowa Withholding Tax Information
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.