Iowa decrees a minimum wage rate of $7.25 per hour. On a broad overview, this is the same rate as the federal minimum wage, which has been adopted as the legal threshold in many other states, such as Tennessee. Iowa employers are required to pay this rate to most employees who don’t fall under any exemptions. Regardless of the number of employees they have, and unless the business is specifically exempt under federal law (such as those with very low annual gross sales), the rate holds. This minimum wage rate has been maintained for a very long time since January 1, 2008.
The current rate, rules for tipped and trainee employees, and common exceptions to help you understand Iowa's wage laws can be found in the subsequent sections.
What is the Standard Iowa Minimum Wage?
The Hawkeye state pays a minimum wage that sets a crucial foundation employers must legally abide by. $7.25 per hour is the minimum wage rate figure for 2025. This figure is significant because Iowa is one of the states that currently defaults to the federal minimum wage.
One of several states that has adopted the federal minimum wage rate as its own state minimum wage, Iowa has no higher state-mandated rate; employers covered by both state and federal law must pay the higher rate, both of which, in this case, are currently equal.
The Minimum Wage Iowa for Tipped Employees
Iowa law permits employers to take a tip credit when paying employees who regularly receive tips.
- Minimum Cash Wage: Legally speaking, an employer is to pay an employee making tips at least $4.35 per hour in direct cash wages
- Tip Credit: The employer takes a tip credit of up to $2.90 per hour (subtracting $4.35 from $7.25 gives $2.90).
- Total Wage Requirement: The sum of the cash wage ($4.35) being paid to the employee and the tips they receive during the course of their work must be on par with or exceed the standard state minimum wage of $7.25 per hour compulsorily.
- Employer Responsibility: If suppose tips, combined with the cash wage of an employee, do not reach $7.25 per hour for any given workweek, the employer is legally obligated to make up the difference, or they will face the due force of law.
Exceptions and Sub-Minimum Wage Rates
The standard $7.25 rate doesn't apply to every single employee in Iowa. Certain groups fall under sub-minimum wage provisions:
- Training Wage for Younger Workers: Employers may pay a new employee under the age of 20 a training wage of $4.25 a hour within a period of the first 90 days of employment. After this, they must be paid a full wage of $7.25.
| Employee Type | Minimum Hourly Rate | Duration | Notes |
|---|---|---|---|
| New Employees Under Age 20 | $6.35 per hour | First 90 calendar days of employment | This rate is only applicable for new employees under the age of 20. |
| All Other Employees | $7.25 per hour | After 90 days or if age 20+ | Standard minimum wage applies. |
- Small Businesses: In the case of small businesses and retail and service establishments with annual gross sales of less than a set amount, the minimum wage law of the state may not apply. Such exemptions are complex and are usually covered by the Fair Labor Standards Act of the United States government.
How Iowa Minimum Wage Compares
Iowa state law integrates its minimum wage rates with the federal minimum wage rate at $7.25 per hour. This contrasts with other states where legislation has been passed to set the state minimum wage rates annually due to the consideration of cost of living and CPI inflation – since the federal minimum wage rate remains stagnant at $7.25 per hour since 2009, so does Iowa's minimum wage rate.
Historical Context of the Iowa Minimum Wage
Many neighboring states that have implemented state-level increments, have not influenced the Iowa minimum wage. It has inexorably been tied to the federal rate for over a decade.
- 2008: The state minimum wage was last increased way back on January 1, 2008.
- Pre-2008: Before 2008, the rate was $6.20 per hour.
- Current Situation: The federal minimum wage has remained unchanged at $7.25 since 2009 which means that the Iowa minimum wage has also remained stagnant for 17 years.
| Year | Minimum Wage Rate (Per Hour) |
|---|---|
| 2005-2007 | $5.15 |
| 2008 | $7.25 |
| 2009 | $7.25 |
| 2010 | $7.25 |
| 2011 | $7.25 |
| 2012 | $7.25 |
| 2013 | $7.25 |
| 2014 | $7.25 |
| 2015 | $7.25 |
| 2016 | $7.25 |
| 2017 | $7.25 |
| 2018 | $7.25 |
| 2019 | $7.25 |
| 2020 | $7.25 |
| 2021 | $7.25 |
| 2022 | $7.25 |
| 2023 | $7.25 |
| 2024 | $7.25 |
| 2025 | $7.25 |
Common Minimum Wage Exemptions
Not all workers are covered by the Iowa Minimum Wage Law. Key exemptions include:
- Exemptions can be given to companies with very low gross annual sales, generally less than $300,000.
- Executive, Administrative, and Professional Employees: Workers in roles that are bona fide executive, administrative, or professional in nature who meet specific salary and duty tests, for whom the federal minimum salary threshold is subject to exemption.
- Certain agro-industrial roles and outside salespeople are also not covered.
FAQs
1. What is the Iowa Minimum Wage
It should be noted that $7.25 is the basic rate of the minimum wage set for 2025. This is of great importance since it is known that Iowa is one of those states that defaults to the federal rate of minimum wage rate.
2. Does the minimum wage for minors differ from that of adult Iowans?
Except for the $6.35 starting employment wage for those under 20 years of age for their first 90 days of employment, Iowa minors are eligible for the same minimum wage rate of $7.25 per hour as established for that state. Therefore, there is no differentiation in wages except for exemptions that are mandatory by law.
3. Are there cities in Iowa that have a different minimum wage?
Although some of the counties and cities have tried to implement a higher minimum wage rate within their jurisdictions, such as in Johnson County and Des Moines, for example, a law passed in 2017 ensures that no city can have a minimum wage rate above the statewide rate. Thus, a uniform minimum wage rate of $7.25 applies throughout Iowa cities.
4. Does my employer have to pay overtime in Iowa?
Under state and federal law, the rule exists that most non-exempt employees are entitled to receive overtime at the rate of 1.5 times the normal rate for all hours worked beyond the first 40 hours in a week.