What payroll taxes does an Iowa employer pay?

An Iowa employer pays the employer share of FICA (6.2% Social Security up to the wage base plus 1.45% Medicare), net federal FUTA of 0.6% on the first $7,000, and Iowa state unemployment insurance on the first $39,500 of wages. There is no employer disability or paid-leave tax in Iowa.

What is Iowa's SUI taxable wage base?

Iowa's unemployment insurance taxable wage base is $39,500 per employee for 2025, far higher than the FUTA $7,000 base. SUI is only charged on wages up to this cap, so a high earner generates no additional Iowa SUI beyond it.

What is the new-employer SUI rate in Iowa?

New non-construction employers in Iowa generally start near 1.00%, while construction employers start higher. After several quarters your rate becomes experience-rated, ranging roughly from 0% to 7%. Enter your assigned rate to override the default.

Why is net FUTA only 0.6%?

The gross FUTA rate is 6.0% on the first $7,000 of wages, but employers in states that pay their SUI on time receive a 5.4% credit. That leaves a net effective FUTA of 0.6%, or about $42 per employee per year.

Does Iowa have an employer disability or paid-leave tax?

No. Unlike California, New York, or Washington, Iowa imposes no state disability insurance (SDI) and no state paid family and medical leave (PFML) employer tax. Those lines are zero for Iowa employers.

Iowa Employer Payroll Tax Calculator

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Hiring in Iowa costs more than the salary on the offer letter. As an employer you owe several payroll taxes on top of gross wages. This calculator adds the employer share of FICA, federal unemployment tax, and Iowa state unemployment insurance so you can see the true cost of an Iowa employee.

How it works

Employer payroll tax has three layers:

Employer FICA = 6.2% × min(wages, 168,600) + 1.45% × wages
Net FUTA      = 0.6% × min(wages, 7,000)
Iowa SUI      = SUI rate × min(wages, 39,500)
Total cost    = wages + employer FICA + FUTA + Iowa SUI

The 6.2 percent Social Security portion stops at the federal wage base, while Medicare at 1.45 percent has no cap. FUTA is effectively 0.6 percent after the 5.4 percent state credit. Iowa SUI applies only to the first $39,500 of wages at your assigned rate.

Example

For a worker earning $50,000, employer FICA is $3,825, net FUTA is $42, and Iowa SUI at the 1.00% new-employer rate on the first $39,500 is $395. Total employer payroll tax is about $4,262, making the true cost roughly $54,262.

Notes

Iowa has no employer-paid disability or paid-leave tax, so those lines are zero. Your exact SUI rate is assigned annually by Iowa Workforce Development based on your claims experience. Confirm current rates and the wage base at iowaworkforce development.gov and irs.gov.