The minimum wage in Iowa is $7.25 an hour as of October 2026, a rate set by Iowa Code section 91D.1 since January 1, 2008. Iowa also lets employers pay new hires at least $6.35 an hour until they've completed 90 calendar days, and it caps the tip credit at 40% of the minimum wage.
This page uses the text of Iowa Code 91D.1 and the U.S. Department of Labor's state, tipped and payday tables, read in October 2026. The headline matches the federal rate, and the Department of Labor's table notes Iowa's rate equals the federal minimum if Iowa's is set below it. The details underneath are where Iowa differs.
Iowa's rates side by side
| Worker | Hourly rate (as of October 2026) |
|---|---|
| Most employees | $7.25 |
| New hire, before 90 calendar days | At least $6.35 |
| Tipped employee, maximum tip credit | 40% of the minimum ($2.90) |
| Tipped employee, minimum cash wage | $4.35 |
The 90-day new-hire rate
Iowa Code 91D.1 says an employer isn't required to pay the full state hourly wage until the employee has completed ninety calendar days of employment with that employer. Until then, the minimum is $6.35 an hour, a figure that's applied since January 1, 2008.
Here's the part people miss. Unlike the federal youth rate, Iowa's lower rate isn't tied to age. It's about how long the person has worked for you. But the statute also says employers covered by the federal law must pay the state rate or the federal minimum, whichever is greater, so for most businesses the federal $7.25 still applies from the first day. Treat the $6.35 rate as something to confirm with an adviser before you rely on it.
Tipped pay in Iowa
Iowa's tip credit is smaller than the federal one. The statute lets employers of restaurant, hotel, motel, inn or cabin staff who customarily receive more than thirty dollars a month in tips count tips toward the minimum, up to forty percent of the applicable minimum wage. The Department of Labor's tipped table turns that into figures.
| Tipped pay item | Iowa (as of October 2026) | Federal rule |
|---|---|---|
| Combined cash wage and tips | $7.25 | $7.25 |
| Maximum tip credit | $2.90 | $5.12 |
| Minimum cash wage | $4.35 | $2.13 |
So an Iowa server's cash wage is more than double the federal tipped minimum. If you pool tips across roles, my tip pooling guide covers who can join the pool.
The small-business exemption
Iowa Code 91D.1 says the state minimum wage requirements don't apply to an enterprise whose annual gross sales are less than three hundred thousand dollars, with exceptions. The statute lists businesses that are covered regardless of sales, including laundering, cleaning or repairing clothing, construction or reconstruction, and running a hospital or care institution.
Even if you're under that line, the federal law can still cover your staff, for example if their work involves interstate commerce. Don't assume the exemption means you can pay below $7.25.
Paydays in Iowa
The U.S. Department of Labor's payday table says Iowa employers must pay most employees on a regular payday at least biweekly, semimonthly or monthly. Any predictable schedule is allowed as long as employees are paid at least monthly and no later than 12 days, excluding Sundays and legal holidays, from the end of the period in which the wages were earned. When staff leave, my final paycheck guide explains how state timing rules compare.
Iowa's rate history
| Year (1 January) | Iowa rate |
|---|---|
| 1991 | $4.25 |
| 1992 | $4.65 |
| 1998 | $5.15 |
| 2008 | $7.25 |
| As of October 2026 | $7.25 |
Iowa and its neighbours
| State | Basic minimum wage (as of October 2026) |
|---|---|
| Iowa | $7.25 |
| Illinois | $15.00 |
| Missouri | $15.00 |
| Nebraska | $15.00 (4+ employees) |
| Minnesota | $11.41 |
| Wisconsin | $7.25 |
Iowa now pays half or less of what Illinois, Missouri and Nebraska require. My Missouri minimum wage guide covers the neighbour that moved fastest.
Two thresholds that don't line up
Here's where Iowa gets confusing. The state exemption uses a three hundred thousand dollar sales line. The federal Fair Labor Standards Act uses a different test: an enterprise with employees in interstate commerce and annual gross sales of more than $500,000, plus schools, hospitals, health care facilities and public agencies whatever their sales. Individual workers can also be covered through their own interstate work.
So a business with sales between those two figures can fall under Iowa's law but outside the federal enterprise test. And a business below both can still have individual workers covered by federal law. If you're anywhere near either line, get a written answer before paying under $7.25.
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- Don't pay the $6.35 new-hire rate without checking federal coverage first.
- Don't use the federal $2.13 tipped wage. Iowa's cash floor is $4.35.
- Don't stretch paydays past 12 days, excluding Sundays and legal holidays, after the period ends.
If you're unsure which side of either line you sit on, the safest payroll choice in Iowa is the full $7.25 from day one, a $4.35 tipped cash wage, and paydays inside the 12-day window.
My verdict
Iowa's $7.25 is straightforward. The details that change your payroll are the $4.35 tipped cash wage, which is much higher than the federal $2.13, and the 12-day payday deadline. The $6.35 new-hire rate looks useful, but federal coverage makes it irrelevant for most businesses.
Frequently asked questions
What is the minimum wage in Iowa?
It's $7.25 an hour as of October 2026, set by Iowa Code 91D.1 since January 1, 2008.
What is the tipped minimum wage in Iowa?
The tip credit is capped at 40% of the minimum ($2.90), so the minimum cash wage is $4.35 an hour.
Can Iowa employers pay new hires less?
The statute allows at least $6.35 an hour before 90 calendar days, but federally covered employers must pay the greater of the state or federal rate.
Are small businesses exempt in Iowa?
The state law exempts enterprises with annual gross sales under three hundred thousand dollars, with exceptions, but federal law may still apply.
How often must Iowa employers pay?
At least monthly, and no later than 12 days (excluding Sundays and legal holidays) after the end of the period the wages were earned.
Is Iowa raising its minimum wage?
The state law read in October 2026 sets no increase above $7.25.
Does Iowa's tip credit cover every business?
The statute's tip rule names employees of a restaurant, hotel, motel, inn or cabin who customarily receive more than thirty dollars a month in tips.
What does federal coverage mean for Iowa employers?
Federally covered employers must pay the greater of the state rate or the federal minimum, which is $7.25.
