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IA · payroll profile

Iowa

Everything an out-of-state employer needs before running a Iowa payroll: what to withhold, which form the employee signs, whether reciprocity applies, and who to register with.

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Personal income tax
Flat 3.8%
Reciprocal agreements
1 states
SUI wage base 2026
$20,400
Local income taxes
Yes

Income tax withholding

Imposes wage income tax Yes
Rate structure Flat 3.8%
Withholding certificate IA W-4 (44-019)
Employee Withholding Allowance Certificate
Accepts federal Form W-4 No
Convenience-of-the-employer rule No
Nonresident withholding threshold $1,000 of in-state wages
Tax Foundation (2026) reports a $1,000 Iowa-source income threshold for nonresidents. Not confirmed against an Iowa DOR withholding publication for the withholding (as opposed to filing) obligation -- verify with the Iowa Withholding Tax Information page before relying on it.
Local income taxes Yes
Iowa school districts may levy an income surtax and counties may levy an emergency services surtax, both computed as a percentage of state income tax liability. These are assessed on the individual's Iowa return -- they are NOT withheld by the employer through payroll.

Reciprocity

Iowa exempts residents of 1 state from Iowa withholding, provided the employee files 44-016 with the employer.

Illinois
Confirmed by the Iowa Department of Revenue: 'At this time, Iowa's only income tax reciprocal agreement is with Illinois.' Illinois residents working in Iowa file Form 44-016 with the Iowa employer. Covers wages and salaries only -- Iowa-source gambling winnings and unemployment compensation are NOT covered.

States that exempt Iowa residents

A Iowa resident working in these states files that state's certificate and is taxed only by Iowa.

District of ColumbiaIllinois

Unemployment insurance and paid leave

Taxable wage base 2026 $20,400
2025 base was $39,500.
New employer rate 1%
Iowa cut its taxable wage base by roughly half for 2026 (from $39,500 to $20,400) under SF 607; 2026 rates come from Table D, the lowest allowed by law, with a 5.4% maximum.
Experience rate range 0% – 5.4%
Experience-rating method benefit ratio
Employee UI contribution No
Paid family / medical leave No

Employer registration

Tax agency
Iowa Department of Revenue
UI agency
Iowa Workforce Development

Sources

revenue.iowa.gov · revenue.iowa.gov · taxfoundation.org · oui.doleta.gov · oui.doleta.gov · oui.doleta.gov · workforce.iowa.gov

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This is a determination aid, not advice. StateSide encodes published state rules and applies them mechanically to the facts you enter. It does not know your entity structure, your nexus history, your equity compensation, or the dozens of exceptions that turn a clean rule into a judgement call. Every determination cites the state source it came from — verify against that source, and take anything consequential to a payroll tax professional before you act on it.