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Iowa Wage and Payroll Tax Facts

February 02, 2024

Having to comply with unique state taxes and wage laws can make processing payroll doubly daunting. Here’s everything you need to know about these rates and laws for the state of Iowa.

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The Hawkeye State requires a similar minimum wage rate to the rate required by the federal government in the Fair Labor Standards Act (FLSA). However, the state has slightly altered rates for Tipped Minimum Wage amounts and Actual Tip Credits. 
 
When it comes to processing payroll, Iowa-based organizations must handle the following taxes in addition to those required by the federal government:

The below information was last updated January 30, 2024. It is not intended as legal or tax advice.

Iowa Minimum Wage Rates

Wage Type

Iowa Rates

Federal Rates

Minimum Wage

 $7.25

$7.25

Tipped Minimum Wage

 $4.35

$2.13

Actual Tip Credit

 $2.90

$5.12

Iowa State Income Tax (SIT) Rates

Iowa's SIT is progressive, meaning it adjusts based on the income level of the employee paying the tax: 

Filing Status Income Tax Bracket
[Over X] - [But not over Y]		 2024 Income Tax Rate
Married (filed jointly) $0 - $12,420 4.40% of excess over $0
$12,420 - $62,100 $546.48 + 4.82% of excess over $12,420
$62,100 or greater $2,941.06 + 5.70% of excess over $62,100
All other statuses $0 - $6,210 4.40% of excess over $0
$6,210 - $31,050 $273.24 + 4.82% of excess over $6,210
$31,050 or greater $1,470.53 + 5.70% of excess over $31,500

 

Additional Iowa SIT Details

Supplemental Withholding Computation

 6.00%

Valid Filing Statuses
  • S = Single
  • M = Married

Exemptions
  • Any services or individuals not subject to withholding under the Internal Revenue Code
  • Nonresidents from Illinois
  • Nonresidents working in film or TV production
  • Nonresident interstate carrier employees
  • Spouses of nonresident military personnel
  • Payers of estimated tax

Form W-4

 Form IA W-4

Reconciliation Frequency

Annual

Iowa State Unemployment Insurance (SUI) Rates

SUI provides unemployment benefits to eligible workers who are unemployed through no fault of their own (as determined by state law) and meet the state’s eligibility requirements.

Iowa SUI Tax Details

Taxable Wage Base

$38,200

Employee Subject to Tax

No

Rates for Experienced Employers

0.00% - 7.00%

Rates for New Employers

1.00%

Effective Period

Calendar Year

Voluntary Contributions Allowed

No

Iowa State Disability Insurance (SDI) Rates

SDI benefits are funded by employees through mandatory payroll deductions from each paycheck. Iowa, however, doesn't require employers to collect an SDI tax.

Miscellaneous Iowa Tax Information

Reciprocal Agreement(s)

Reciprocal agreements are when workers who live and work in different states are only required to pay taxes to the state where they live. Iowa currently only has a reciprocal agreement with Illinois.

As such, Illinois residents who work in Iowa will only have to pay Illinois SITs provided they submit a completed Form 44-016 to their Iowa-based employers. The opposite is true for Iowa residents who work in Illinois, but they must instead submit a completed Form IL-1040 and Form IL-W-5NR to their employers.

Paid Sick Leave (PSL) Taxes

The state of Iowa doesn’t require employers to collect PSL taxes, nor does the state have a program providing such leave to employees.

Paid Family and Medical Leave (PFML) Taxes

The state of Iowa doesn’t require employers to collect PFML taxes, nor does the state have a program providing such leave to employees.

Iowa Employer Registration

The agencies below can help with your state-based employer registration, including best practices, account numbers, and unemployment information. Contact the Department of Revenue for withholding tax topics and the Iowa Workforce Development agency for unemployment tax topics.

Registration Details

Department of Revenue

Iowa Workforce Development

Phone

 (515) 281-3114 (888) 848-7442

Online Registration

 GovConnectIowa Homepage myIowaUI Homepage

Registration Form

 Iowa Business Tax Permit Registration N/A

Registration Instructions

 Online and paper registration options are available. Account number, Business E-file Number (BEN), and Filing Frequency will be issued in 4-6 weeks. Online registration is required. Account number will be issued during the online process.

Employer Self-Service Login

 GovConnectIowa Homepage myIowaUI Login Page

Additional Iowa Payroll Tax Resources

 

This information is provided as a courtesy and may be updated at any time. It is not intended as legal or tax guidance. If you have questions or concerns, we encourage you to seek the advice of a qualified CPA, tax attorney, or advisor.

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