Currently, the state of Iowa follows federal wage laws and does not have a separate state minimum wage rate. Proposals exist to deviate from the federal wage laws, but legislative action has been slow.
What you’ll learn
What you’ll learn
Key takeaways
- The Iowa minimum wage hasn’t changed since 2008
- All local Iowa jurisdictions must follow state minimum wage guidelines
- New hires and tipped employees may also earn a lower minimum wage
- Iowa investigates wage infractions if an employee files an official written complaint
This guide explains the details of the Iowa minimum wage, including current rates, exemptions, and enforcement. It also touches on proposed increases and compares regional minimum wage laws.
What is the Iowa minimum wage in 2026?
The state of Iowa’s minimum wage is $7.25, which is the same as the federal minimum wage. Iowa has had the same minimum wage since January 1, 2008, when it increased from $6.20.
Is the Iowa minimum wage going up?
Several Iowa counties have attempted to raise the local minimum wage, including Johnson, Polk, and Lee. These counties successfully passed laws raising the minimum wage for businesses in their jurisdictions.
However, in 2017, the governor of Iowa signed HF 295, which preempted local minimum wage changes. This bill prevents any municipalities, counties, and other local jurisdictions from introducing a minimum wage that conflicts with state legislation. It effectively nullified the existing local laws that increased wage requirements.
Since then, Johnson County has passed symbolic legislation for a new minimum wage. Its latest 2025 effort brought the local minimum wage to $13.02, which is based on data from the Consumer Price Index. However, the new wage is unenforceable under state laws.
While there are no current plans to update the Iowa minimum wage, shifts in federal policy could bring about an increase. If the federal government votes to increase the minimum wage, the change would supersede Iowa’s current legislation, and all businesses would have to follow the new wage rules.
How is Iowa’s minimum wage enforced?
The Iowa Wage and Child Labor unit administers the state’s wage law. Employees who believe their pay doesn’t align with regulations may submit a claim. The department investigates complaints and may require an employer to pay outstanding amounts due. It also retains the authority to issue a civil penalty of $100 per violation.
Iowa does not conduct random wage inspections of local employers. However, it may initiate one if someone makes a written complaint against the business. In an inspection, representatives of the Iowa Wage and Child Labor unit review payroll records and interview company representatives.
Iowa requires employers to retain all payroll records for at least three years. The records should include worked hours, earned wages, and deductions. Businesses must also keep a copy of the state’s minimum wage poster in a location where employees can view it.
Is $21 an hour realistic for Iowa employers?
Iowa employers are not obligated to pay workers more than the minimum wage. However, many organizations offer higher pay based on a job’s responsibilities and market rates. It’s not unusual for employers to offer $20/hour or more for skilled and professional roles.
Use OnPay’s Iowa payroll calculator to estimate an employee’s net pay based on their wage and deductions.
Comparing the Iowa minimum wage to surrounding states
Iowa is one of the few Midwestern states that has not yet adopted a minimum wage above federal standards. Here’s a look at the minimum wage for several nearby states:
| State | 2026 minimum wage | 2026 tipped wage | Compliance rules and exemptions |
| Minnesota | $11.41 (large employers) | No tip credit permitted |
|
| Illinois | $15 | $9 |
|
| Missouri | $15.00 | $7.50 |
|
| Nebraska | $15.00 | $2.13 |
|
You can check state minimum wage laws nationwide in our comprehensive guide.
Who is exempt from Iowa minimum wage rules?
Iowa employers with less than $500,000 in annual gross sales are not subject to the state’s minimum wage laws. They may pay workers a wage below the state minimum. However, this exemption doesn’t apply to organizations in certain industries, including:
- Construction or reconstruction
- Hospitals
- Residential care centers for the sick, elderly, or mentally disabled
- Preschools, elementary schools, and secondary schools
- Higher learning institutions
- Public agencies
Employers subject to minimum wage requirements can pay new workers a training wage of $6.35 per hour for their first 90 days of employment. This lower rate isn’t a youth exemption — it applies to any new employee, regardless of their age or experience. The 90-day wage is only available once. If an employee leaves the organization and returns after the 90-day period, the employer must pay them at least the state minimum wage.
The Iowa minimum wage for servers and other tipped employees is $4.35. Employers may pay this wage to any employee who customarily receives at least $30 monthly in tips. If an employee’s hourly earnings from the tipped wage and tips don’t meet the state minimum wage, the employer makes up the difference.
Small-business friendly
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— Mary Menzies, Peabody & Smith Realty
As an SMB owner or manager, it’s important to have a handle on payroll processing basics. Software that tracks qualifying exemptions, retains wage records, and automatically withholds and reports payroll income tax can help you avoid unwanted mistakes.
OnPay offers those perks and more. It can also help you manage state-by-state direct deposit rules for employees outside Iowa.
How to stay ahead of wage rules in Iowa
While Iowa’s minimum wage currently mirrors the federal rate, staying compliant isn’t always simple. Between managing the $4.35 tipped wage, tracking the 90-day training rate for new hires, and monitoring sales exemptions, payroll requires close attention.
Fortunately, a reliable payroll platform puts you in control. OnPay gives you the tools to easily apply training wages, calculate tip credits, and handle tax filings all in one place. You get accurate payroll so you can spend less time on paperwork and more time running your business. Get started with OnPay today.
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Jon Davis is the Sr. Content Marketing Manager at OnPay. He has over 15 years of experience writing for small and growing businesses. Jon lives and works in Atlanta.