Iowa Salary Paycheck Calculator
Building your business into a success is every owner’s dream. But part of that dream may involve a nightmare called payroll taxes. If you have employees, knowing payroll taxes is a must. Don’t lose any sleep over this—we’ll cover the basics of Iowa state payroll taxes and federal payroll taxes to make sure you’re up to speed.
Iowa state payroll taxes
Iowa withholding tax
As of March 1, 2022, the state of Iowa has a flat income tax rate of 3.9%.
With several different tax rates, calculating how much to take out of your employees’ paychecks requires a form, some tax tables, and some math.
When employees begin working for you, they should complete Form IA W-4, Employee Withholding Allowance Certificate. This will let you know how many allowances they are claiming or whether they are exempt from withholding.
If your employee doesn’t complete the form, that doesn’t mean you don’t withhold any tax. It means the maximum amount of tax must be withheld, so you’ll withhold as if the employee claims zero allowances.
With the information on the Iowa form, you’ll use withholding tables or a formula to calculate the tax amount.
You’ll need to send the withholding tax to Iowa’s Department of Revenue semi-monthly, monthly, or quarterly, depending on how much tax you withhold in a year.
| Iowa Withholding Tax Payment Frequency | |
| Tax Withheld Per Year | Payment Frequency |
| <$6,000 | Quarterly |
| $6,000 – $120,000 | Monthly |
| >$120,000 | Semi-monthly |
All employers need to electronically file quarterly withholding tax returns, regardless of how frequently they pay.
By February 15, you’ll need to file an annual summary report electronically and provide copies of Form W-2 and 1099 if any Iowa tax was withheld.
Iowa unemployment tax
Iowa’s Workforce Development office administers the state unemployment insurance program. All businesses need to register within 30 days of hiring employees for the first time or acquiring an existing business.
Iowa uses tax rate tables to determine unemployment tax rates employers pay. There are eight tables and for 2022, they are using table seven, where rates are between 0.0% and 7.5%.
For 2022, the wage base for Iowa’s unemployment tax is $34,800. That means employers only pay tax up to this amount for each employee.
Iowa has a helpful employer handbook covering the nuts and bolts of unemployment insurance.
Other Iowa paycheck rules and laws
Don’t forget about these essential paycheck rules in Iowa.
- Federal salary threshold – The federal salary threshold is now $684 per week (equivalent to $35,568 per year for a full-year worker). The Department of Labor permits employers to count some bonuses, commissions, and other incentive payments toward meeting the standard salary level (up to 10%). Employees who earn at least $107,432 per year may qualify as “highly compensated.” See this Department of Labor fact sheet for details.
- Final paychecks – When workers leave for any reason, their final paycheck is due by the next regularly scheduled pay date.
- Voting time off – In certain circumstances, employers may need to provide up to three hours of paid time off to allow employees to vote.
- Workers’ Compensation – 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.
New hires – Don’t forget to report new employees to the Centralized Employee Registry within 15 days of hire.
Federal payroll taxes in Iowa
Don’t forget that you’ll need to collect and pay federal payroll taxes too. They can be broken into three categories.
| Federal Payroll Taxes in 2022 | ||
| Employer-Paid | Employee-Paid | Jointly-Paid |
| FUTA | FIT | FICA |
| Additional Medicare |
FUTA – Federal unemployment tax
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.
FUTA is generally paid to the IRS annually in January using Form 940, Annual Federal Unemployment (FUTA) Tax Return. However, if you owe more than $500, then quarterly payments are necessary.
FIT – Federal income tax
Employees need to pay their federal income tax bill throughout the year via payroll deductions.
It starts with Form W-4, Employee’s Withholding Certificate, that each worker should complete when they start working for you. Here they’ll indicate their tax filing status and their number of dependents that will help you determine their tax amount. Learn more about how to fill out Form W-4.
Armed with this information and some tax tables, you can do a bit of math to figure out how much to take out of their paychecks. But if you’d rather have a computer crunching numbers, check out Gusto’s payroll software.
You’ll need to send the tax you withhold to the IRS monthly or semi-weekly, depending on the amount. And each calendar quarter, you’ll need to send a summary report on Form 941, Employer’s Quarterly Federal Tax Return.
Additional Medicare tax
Some employees may need to pay the Additional Medicare tax. Who pays depends on tax filing status and total earnings.
All employees earning more than $200,000 a year need to have this tax taken out of their paycheck. For 2022, the rate is 0.9% on wages above $200,000.
You’ll send this tax to the IRS at the same time you send your federal income tax withholding. And you’ll report this tax on Form 941.
FICA – Social Security and Medicare taxes
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.
This tax gets sent to the IRS at the same time as the federal withholding tax and the Additional Medicare tax. And you’ll also include it on Form 941.
You’ve reached the finish line! And you’re ready to calculate your payroll and pay your workers. But if you’d rather leave payroll processing to the experts, seek out a qualified accountant near you or check out comprehensive payroll providers who’ll make sure your employees are paid on time and your payroll taxes are never late.
Disclaimer
The information provided by the Employer Tax Calculator is for general information and estimation. All of the taxes or fees that apply to your business may not be accounted for, or fully up to date. Gusto, Inc. (dba “Gusto”) does not promise or guarantee that the information in the Employer Tax Calculator is accurate or complete, and Gusto expressly disclaims all liability, loss or risk incurred by employers or employees as a direct result or an indirect consequence of its use. By using the Employer Tax Calculator, you waive any rights or claims you may have against Gusto in connection with its use.