Iowa Hourly Paycheck and Payroll Calculator

Iowa Hourly Paycheck Calculator

If thinking about payroll taxes creates an image of alphabet soup in your mind, you’re not alone. With things like FUTA, SUTA, and FICA, payroll taxes can seem like a foreign language.

We’re fluent in payroll taxes, so we’ve translated for you and answered the most commonly asked questions about Iowa payroll taxes.

Iowa state payroll taxes

Does Iowa have a withholding tax for state income taxes?

Yes, Iowa has a 3.9% flat income tax rate for 2022.

To calculate how much to take out of your employees’ paychecks, you need them to complete Form IA W-4, Employee Withholding Allowance Certificate. This form lets you know things like how many allowances your worker is claiming or whether they are exempt from withholding tax. 
Using the Iowa form and your employee’s pay amount, you can calculate the tax amount with the help of Iowa’s withholding tables or formula.

How do I pay the withholding tax to Iowa?

Your payment schedule depends on how much tax you owe in a year. You’ll pay semi-monthly, monthly, or quarterly. 

In addition to paying the tax, you’ll need to file quarterly withholding tax returns electronically. All employers file quarterly, even if you pay more frequently.

And each year, an electronic annual summary report, along with copies of Form W-2 and 1099 if Iowa tax was withheld, must be filed by February 15.

Does Iowa have an unemployment tax?

Yes, Iowa has an unemployment tax that employers pay that helps workers who are out of work through no fault of their own. 

The Iowa Workforce Development office requires that all businesses register for an account within 30 days of hiring their first employee or acquiring a business. 

Iowa’s unemployment tax uses tax tables numbered one through eight to set the rates employers pay. For 2022, they use table seven with rates ranging from 0.0% to 7.5%.  

For 2022, the first $34,800 of each employee’s wages is subject to unemployment tax. 
For more details on Iowa’s unemployment tax, check out their employer handbook.

What’s the minimum wage in Iowa?

As of January 1, 2022, the minimum wage in Iowa is $7.25 per hour. But paying new hires an “initial employment wage” of $6.35 per hour for the first 90 days is allowed.

When do final paychecks need to be provided to employees?

Employers must provide final paychecks no later than the next regularly scheduled pay date for all employees who leave.

When is Workers’ Compensation insurance required in Iowa?

Requirements to obtain Workers’ Compensation vary by state, this table outlines some of these requirements. If you determine that your company is required to purchase Workers’ Compensation insurance in your state, learn how to sign up for this insurance with Gusto. Sometimes, companies get a request for a workers’ comp audit—head to this article and click the workers’ comp audit reports dropdown for more information.

When is overtime pay required in Iowa?

Since Iowa has no state law governing overtime pay, the rules under the federal Fair Labor Standards Act apply. You’ll need to pay at least one and one-half times the regular hourly rate for all hours worked over 40 hours in a workweek for hourly workers. 

Does Iowa require employers to provide paid time off?

In limited circumstances, employers may need to provide up to three hours of paid time off to allow employees to vote.

Is new hire reporting required in Iowa?

Yes, employers have 15 days to report newly hired workers to the Centralized Employee Registry.

Federal payroll taxes in Iowa

Is there a federal unemployment tax?

Yes, like the state, the federal government also has an unemployment tax. It’s called FUTA and it’s an annual tax employers pay on the first $7,000 of each employee’s wages. The FUTA rate for 2022 is 6%, but most employers only have to pay 0.6% each year.

How much federal withholding do I need to take out of workers’ pay?

Unless an employee is exempt from withholding, all workers need to have federal income tax taken out of each paycheck. The amount withheld varies depending on several factors.

Have each employee complete Form W-4, Employee’s Withholding Certificate, when they start working for you. This form will tell you the number of dependents the employee has and their tax filing status—both of these bits of information factor into how much tax to take out.

With this information, the worker’s pay amount, and the federal tax tables, you have all the pieces to the puzzle to figure out the amount of tax to withhold. If that sounds daunting, don’t worry. Payroll software can eliminate the need to flip through tax tables. With just a few clicks, it can spit out the tax amounts for you.
Depending on how much you withhold, you’ll need to send the tax to the IRS either semi-weekly or monthly. And all employers need to send in a quarterly payroll tax return using Form 941, Employer’s Quarterly Federal Tax Return.

What is FICA tax and how’s it calculated?

The Federal Insurance Contributions Act (FICA) is made up of the Medicare tax and the Social Security tax.
In 2022, the Social Security tax requires employers and employees to each contribute 6.2% of wages up to $147,000. The Medicare tax requires each to contribute 1.45% of all wages. See the IRS webpage for details, like maximum thresholds.

What’s the Additional Medicare tax?

The Additional Medicare tax came into effect in 2013 with the passage of the Affordable Care Act.

If you have employees earning more than $200,000 a year, you’ll need to withhold the Additional Medicare tax from their pay. For 2022, the rate is 0.9% on wages above $200,000.

If you collect this tax from any employees, you’ll send it off to the IRS when you send in your FICA and federal income tax withholding. And just like those other two taxes, you’ll need to include the Additional Medicare tax on your Form 941. 
We hope these FAQs and answers were helpful and answer any questions you have about Iowa payroll taxes. And if you’d prefer to leave payroll to the pros, we understand. Qualified accountants can take the lead.