Iowa payroll taxes
Every tax withheld from a Iowa paycheck or paid by the employer in 2026, with rates and wage limits.
Last verified November 2, 2026. Sources: news.bloombergtax.com, taxfoundation.org, oregon.gov.
| Tax | Employee pays | Employer pays | Wage limit |
|---|---|---|---|
| Social Security | 6.2% | 6.2% | $184,500 |
| Medicare | 1.45%* | 1.45% | No limit |
| FUTA | — | 0.6% | $7,000 |
| Iowa SUTA | — | 1% (new) | $20,400 |
| Iowa income tax | 3.8% | — | — |
*Plus 0.9% Additional Medicare Tax withheld on wages over $200,000. FUTA rate shown is net of the state credit.
The Iowa SUTA wage base changes to $21,100 in 2027.
State unemployment insurance
Iowa charges new employers 1% on the first $20,400 each employee earns in a year. After a few years, the rate is based on the employer's layoff history and ranges from 0% to 5.4%. The 2026 wage base fell from 2025. The 2027 base of $21,100 was announced by Iowa Workforce Development on June 30, 2026.
Register and file with the Iowa unemployment tax agency.
Income tax withholding
Iowa has a flat income tax of 3.8% on taxable income. School district income surtaxes (a % of state income tax liability, typically 0-10%) in many districts
Frequently asked questions
- What payroll taxes do employers pay in Iowa?
- Social Security, Medicare, federal unemployment (FUTA) and Iowa unemployment insurance (SUTA).
- What is the Iowa SUTA wage base for 2026?
- $20,400 per employee. It changes to $21,100 in 2027.
- Does Iowa require state income tax withholding?
- Yes. Employers withhold Iowa income tax based on the employee's state withholding certificate or federal W-4.