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Iowa Minimum Wage 2026: What Employers Must Know
The Iowa minimum wage in 2026 is $7.25 under Iowa Code 91D.1, the same as federal, with two state-specific exceptions: a $6.35 initial employment wage for the first 90 calendar days and a $4.35 cash wage for tipped employees. BEG runs Iowa payroll at $45 per employee per month, live in 3 to 5 business days.
The Iowa minimum wage in 2026 is $7.25 per hour, matching the federal minimum wage exactly, according to the U.S. Department of Labor.
Iowa is one of several states that has not enacted a state minimum wage above the federal floor. This guide covers the current rate, overtime rules, and what Iowa employers need for payroll compliance in 2026.
Iowa Minimum Wage vs. Federal Minimum Wage
| Jurisdiction | 2026 Minimum Wage |
|---|---|
| Iowa | $7.25/hour |
| Federal (FLSA) | $7.25/hour |
Because Iowa has not set a state minimum wage above the federal rate, employers must pay at least $7.25 per hour statewide, subject to any applicable tipped-wage rules.
Overtime Rules in Iowa
Iowa follows federal FLSA overtime rules: nonexempt employees are owed 1.5 times their regular rate for hours worked over 40 in a workweek. There is no state-specific daily overtime trigger in Iowa.
Paid Sick Leave and Family Leave in Iowa
Iowa does not currently mandate paid sick leave or operate a state paid family and medical leave program. Employers should track any applicable federal leave obligations and monitor for local ordinances that could change requirements over time.
Tipped Wages and Local Ordinances
| Initial employment wage | An employee who has not completed 90 calendar days with the employer may be paid $6.35 an hour. The clock is per employer, so a rehire who already passed 90 days does not restart it. [Iowa Code 91D.1] |
|---|---|
| Tipped employees | Employees who customarily and regularly receive more than $30 a month in tips must be paid a cash wage of at least $4.35, which is higher than the federal $2.13, with tips bringing the total to $7.25. [Iowa Code 91D.1] |
| Enforcement | Iowa Workforce Development, Labor Services Division, administers the state minimum wage under Iowa Administrative Code 875, chapter 215. [Iowa Admin. Code 875-215] |
What This Means for Payroll Compliance
Even in a state without a higher state minimum wage, payroll compliance still requires accurate overtime calculations and correct tipped-wage tracking on every pay run. Manual processes leave room for error as a business grows or adds hourly staff.
BEG's managed payroll service builds Iowa's wage and overtime rules directly into your payroll configuration, so compliance does not depend on someone remembering to check for updates.
Iowa Payroll, Handled.
BEG manages payroll at $45 per employee per month, all-inclusive. Get an instant cost comparison for your Iowa business.
Learn more about managed payroll in Iowa or HR outsourcing in Iowa to see how BEG supports compliance beyond the pay run.
Frequently Asked Questions
What is the minimum wage in Iowa in 2026?
The Iowa minimum wage is $7.25 per hour in 2026, matching the federal minimum wage. Iowa has not enacted a state minimum wage above the federal floor.
Does Iowa require overtime pay?
Yes. Iowa follows federal FLSA overtime rules, requiring 1.5 times the regular rate for hours worked over 40 in a workweek. There is no separate daily overtime rule under Iowa law.
Does Iowa require paid sick leave?
No. Iowa does not have a state-mandated paid sick leave law or a state paid family and medical leave program. Employers should still confirm any applicable federal leave requirements.
Are tipped employees paid the full Iowa minimum wage?
Iowa allows a tip credit against the minimum wage for eligible tipped employees. Because credit amounts and eligibility rules can change, confirm current requirements at the Department of Labor state contacts page.
What is the tipped minimum wage in Iowa?
Iowa sets the tipped cash wage at $4.35 an hour for employees who regularly receive more than $30 a month in tips, more than double the federal $2.13. Tips must bring the employee to at least $7.25, and the employer pays any shortfall.
How does BEG help with Iowa payroll compliance?
BEG manages payroll at $45 PEPM, all-inclusive, handling Iowa wage compliance, overtime calculations, and tax filings as part of a flat monthly rate.
Anthony leads payroll solutions at Business Executive Group, a national managed payroll firm serving businesses across industries. BEG manages payroll at $45 PEPM, all-inclusive, with deep expertise in compliance, multi-state filing, and industry-specific payroll requirements. Get instant pricing at beghr.com.
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