Iowa Minimum Wage 2026: $7.25, With a $4.35 Tipped Wage and No Local Rates
Iowa’s minimum wage is $7.25 an hour, unchanged since January 1, 2008 and equal to the federal rate. It is not indexed and no increase is scheduled. Tipped employees who get $30 or more a month in tips can be paid $4.35 an hour, higher than the federal $2.13. Iowa allows $6.35 for a new hire’s first 90 days, but employers covered by federal law must still pay $7.25. Cities cannot set a higher local minimum, so $7.25 applies statewide.
Iowa at a glance
| Current rate | $7.25 / hour |
|---|---|
| Effective | January 1, 2008 |
| Tipped cash wage | $4.35 / hour (tip credit capped at 40% of the minimum) |
| Next scheduled change | None scheduled; not indexed to inflation |
| Initial employment wage | $6.35 / hour for the first 90 days (federal $7.25 still applies to FLSA-covered employers) |
| Small business exemption | Enterprises under $300,000 in annual sales (federal law may still apply) |
| Local rates | None; cities are preempted |
How the Iowa minimum wage is set
Iowa Code 91D.1 sets the state hourly wage at “$6.20 as of April 1, 2007, and $7.25 as of January 1, 2008.” There is no inflation index and no later step in the statute, so the rate stays at $7.25 until the Iowa Legislature changes the law. Because $7.25 is also the federal minimum wage, an increase in either would raise the floor for most Iowa employers: the higher of the two applies.
Iowa cities cannot set their own rate. Iowa Code 364.3(12) bars a city from adopting or enforcing an ordinance on a minimum or living wage that exceeds state or federal law, and voided any such ordinance adopted before March 30, 2017. The $7.25 rate applies statewide.
Tipped employees
An employee who receives $30 or more a month in tips can be paid as little as $4.35 an hour, according to DIAL's wage claims FAQ. The statute caps the tip credit at 40% of the minimum wage. If the cash wage plus tips does not average at least $7.25 an hour in a workweek, the employer must pay the difference. That $4.35 cash wage is higher than the federal tipped cash wage of $2.13, so Iowa employers use the state figure.
Exceptions: the 90-day rate and small businesses
Two Iowa exceptions look like they allow less than $7.25, and both need care:
- Initial employment wage: Iowa law allows $6.35 an hour for a new employee's first 90 calendar days with the same employer, used only once per employee even if they are rehired later. It is lower than the federal minimum, so an employer covered by the Fair Labor Standards Act must still pay $7.25. DIAL notes it is not the same as the federal youth or training wage.
- Small enterprises: the state minimum does not apply to an enterprise with less than $300,000 in annual gross sales or business, but hospitals, schools, construction, laundries and public agencies are covered regardless. Federal law can still reach employees of a small business, for example those engaged in interstate commerce, so check before paying less than $7.25.
What this means for hiring
$7.25 is a legal floor, not a hiring wage. Most Iowa employers filling frontline roles pay well above it because the local labor market demands it, and Iowa's floor has not moved since 2008. The rate that matters in a job ad is the one you actually pay: put it in the first line. To see what an Iowa hire costs at that rate once payroll taxes and benefits are added, use the employee cost calculator. For breaks, overtime, final pay and new-hire rules, see Iowa labor laws for employers.
This page is general information, not legal advice. Check DIAL's wage and child labor pages before you set pay.
Frequently asked questions
What is the minimum wage in Iowa in 2026?
$7.25 an hour, the rate set by Iowa Code 91D.1 on January 1, 2008 and the same as the federal minimum. Tipped employees who receive at least $30 a month in tips can be paid $4.35 an hour in cash, as long as wages plus tips reach $7.25. Iowa cities cannot set a higher rate.
Is Iowa raising its minimum wage?
Not on any schedule. Iowa's minimum wage is not indexed to inflation and the statute has no future increases, so it stays at $7.25 unless the Iowa Legislature changes the law or Congress raises the federal minimum, which Iowa employers covered by federal law would have to follow. Cities cannot raise it locally.
What is the tipped minimum wage in Iowa?
Iowa employers may pay tipped employees $4.35 an hour if the employee receives $30 or more a month in tips. The tip credit cannot exceed 40% of the minimum wage. If wages plus tips average less than $7.25 an hour in a workweek, the employer must pay the difference. That is above the federal tipped cash wage of $2.13.
Can I pay a new employee $6.35 an hour in Iowa?
Iowa law allows an initial employment wage of $6.35 for the first 90 calendar days, once per employee. But the federal minimum wage is $7.25, and it applies to most employers under the Fair Labor Standards Act. If federal law covers your business or the employee, you must pay at least $7.25 from day one.
Can Iowa cities set a higher minimum wage?
No. Iowa Code 364.3(12) prohibits cities from adopting or enforcing any ordinance on a minimum or living wage that exceeds state or federal law, and made earlier local ordinances void on March 30, 2017. That is why Iowa's $7.25 applies in Des Moines, Cedar Rapids, Iowa City and everywhere else.
Hiring hourly workers in Iowa?
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