Iowa Payroll Tax And Labor Laws

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Did you know that Iowa and Illinois have a bilateral withholding agreement that permits income tax withholding solely for the employee’s home state?

Iowa Wage and Hour Laws

Iowa’s minimum wage legislation requires that employees be paid at least $7.25 per hour.

All employees are covered except for:

• those exempt from coverage by the Fair Labor Standards Act;
• outside salespersons;
• employees of retail or service establishments if more than 50 percent of the annual dollar volume of sales is made within the state and 75 percent of the annual dollar volume of sales is not for resale;

• businesses with yearly gross income less than 60% of the FLSA limit in retail or service;

• employees in the marine industry; and

• employees in the agriculture industry.

Iowa Payroll for Employers

Employers who are subject to Iowa’s wage payment legislation are required to pay wages at least once a month, semimonthly, or biweekly. Payments must be paid no later than 12 days after a pay period ends, except Sundays and legal holidays.

Except for those explicitly exempted by legislation, all employees are covered, with the exception of some agricultural employees.

Iowa Unemployment:

Taxable Wage Base ($000s):                        32,400

New Employer Rate (% Taxable Wages)    1.0 or 7.5

Employee Tax Rate (% Taxable Wages)     None

Iowa Income Tax Withholding

Employers in Iowa are required to withhold state income tax from employees’ pay and return the withheld amounts to the Iowa Department of Revenue.

Every employer with an office or a business in Iowa that is obliged to withhold federal income tax on any remuneration received in the state is also required to withhold Iowa individual income tax. The employer or withholding agency is responsible for collecting and remitting the tax.

If federal income tax must be withheld, agricultural employers must withhold Iowa tax from pay.

A reciprocal withholding agreement exists between Iowa and Illinois, which allows withholding from salaries for the employee’s home state alone.

Iowa Benefits

Iowa Voting Rights:

Employer Right to Schedule Voting Hours         Yes

Pay Deduction for Voting Time Leave                 Time Off with Pay Limited to 2 Hours

Employers in Iowa are required to provide employees enough time off to vote.

The scope of this overview is limited to private employers. Employers must provide adequate voting time leave — not more than three hours — for employees to vote for three hours in a row. Employers can specify the amount of time that must be taken.

Iowa State Tax Resources