Mohler for Iowa

Proposed legislationworkersThe agenda

RAISE Act

Raising And Indexing State Earnings

An Act relating to the state minimum wage, including steps in and annual adjustments to the state hourly wage, and including effective date provisions.

Page one

The short version

What's broken, what the bill does, and what it costs, in plain English. If you read one thing, read this.

If you work full time at Iowa's minimum wage, you make $15,080 a year. Under this bill, that same job pays $23,920 starting January 1, 2029, a year later at a small business, then the floor keeps moving with Iowa's own paychecks.

Iowa's minimum has been $7.25 since January 1, 2008. Prices didn't wait. What $7.25 bought then takes about $11.52 today. Minnesota, South Dakota, Nebraska, Missouri and Illinois all pay more than we do. Only Wisconsin is stuck at $7.25 with us.

I won't pretend most jobs around here pay that little. They don't. In the federal wage survey for southeast Iowa outside the metro areas, including Appanoose, Davis, Monroe and Wapello counties, one job in ten paid $13.49 an hour or less. This bill's steps reach fewer than one job in ten here. Tipped workers are the exception: the survey counts their tips, but their cash wage rises, from $4.35 to $6.00, then $6.90.

The RAISE Act does five things.

  • Two steps up. $10.00 an hour on January 1, 2028, and $11.50 on January 1, 2029.
  • Then it keeps up on its own. Starting in 2030, it rises with Iowa's own wages and never falls behind prices. Each year it's set at 55 percent of what the Iowa worker right in the middle earns an hour, or last year's rate plus inflation, whichever is higher. The wage target can lift it no more than 8 percent a year.
  • More time for small businesses. An employer with fewer than 20 workers gets an extra year for each step, then catches up under the same 8 percent limit.
  • Fair rules for new hires. A new worker can be paid 85 percent of the minimum for the first 90 days. Firing and rehiring within a year doesn't restart the clock.
  • Tipped workers keep today's deal. Tips can count for up to 40 percent of the minimum. If they come up short, the employer pays the difference.

What it doesn't do: it isn't a living wage. MIT estimates a single adult with no kids in Iowa needs $21.29 an hour. If voters want it closer, a later session can raise 55 percent to 60 percent. Businesses with sales under $300,000 a year stay exempt, as now. We'll debate that after this passes. Cities and counties still can't set their own minimum. I'd vote to give that back in a separate bill.

Employers pay the raise, including the state, cities, counties and schools for their own low-paid workers. No one has priced that yet. We'd get the cost estimate before voting and budget the state's own share.

If you work for a living, we're on the same side.

That's the whole bill in brief. The rest of this page is the detail behind it, for anyone who wants to dig in.

See where it goes

An hour of work at the bottom of the scale

How to read this Every bar starts at the same line, so a longer bar is more money. Point at or tap a bar to see its range.

Hourly pay. The last bar uses Iowa's median wage today. The real target each year depends on the wages and prices published that year, and the cap limits how fast the wage target can raise it.

The same numbers, side by side

  • Today
  • Set in the bill
  • The yearly formula, on today's numbers
  • Iowa's minimum wage today
    $7.25
  • What that wage bought when it was set, at today's prices
    $11.52
  • The pay line one job in ten in southeast Iowa sits at or under
    $13.49
  • First step of the bill
    $10.00
  • Second step of the bill
    $11.50
  • Fifty-five percent of Iowa's median wage today
    $12.84

The analysis

What it costs, and what we don't know yet

For anyone who wants the costs and the tradeoffs. Every figure is a range where the future is uncertain, and every one links back to where it came from.

Who gets a raise

Very few Iowans are paid exactly $7.25. The Bureau of Labor Statistics counted about 6,000 Iowa workers paid by the hour at or below the federal minimum in 2024, out of 858,000 paid by the hour, or 0.7 percent (BLS). BLS warns that sampling error "may be quite large for some state estimates," so read that as a few thousand people, not an exact count. Its count leaves tips out.

The people this bill is really about earn a little more than that. In the federal wage survey for May 2025, one Iowa job in ten paid $13.91 an hour or less, and in southeast Iowa outside the metro areas, which takes in Appanoose, Davis, Monroe and Wapello counties, one in ten paid $13.49 or less. The job right in the middle, the median, paid $23.34 statewide and $22.69 in southeast Iowa (BLS wage survey). So the bill's two steps, $10.00 and $11.50, reach fewer than one job in ten here. Tipped workers are the exception. The survey counts tips as pay, so a server whose pay with tips is above $13.49 sits above that line, but the cash wage the employer owes still rises, from $4.35 to $6.00, then $6.90. We don't have a count of Iowa workers under either step. No federal table publishes one, and building it from the Census Bureau's survey files is work we haven't done.

A year of full-time work at today's minimum pays $15,080. At the first step it's $20,800, and at the second, $23,920.

How the yearly number is set

Each year by September 1, the director of the Department of Inspections, Appeals, and Licensing works out the next year's rate. The first one is due September 1, 2029, for the rate that starts January 1, 2030. That department already runs and enforces Iowa's minimum wage law (section 10A.202). The director uses two numbers the federal government already publishes:

  • Prices. Last year's rate, raised by how much the consumer price index for wage earners (CPI-W) went up over the year ending in July. We use July instead of August because the August index comes out in mid-September, after the deadline.
  • Iowa wages. 55 percent of Iowa's median hourly wage in the newest May wage survey, but never more than 8 percent above last year's rate.

Each is rounded up to the next five cents, except that the wage figure rounds down instead when rounding up would carry it past the 8 percent cap. Then the higher of the two wins. The rate never goes down, even in a year when prices fall. If the government misses a month, the director uses the latest month published for both years. That has happened: there is no price index for October 2025, because of the federal shutdown (BLS). The director publishes every rate along with the figures behind it, so anyone can check the math.

A worked example, on today's numbers. These are the latest figures published now, not the ones the director will have in 2029. Say the rate is $11.50 and the director runs the formula today.

  • Prices: the index for July 2026, compared with a year earlier, was up 3.4 percent. $11.50 plus 3.4 percent, rounded up to the next five cents, is $11.90.
  • Wages: 55 percent of Iowa's median of $23.34 is $12.84. The cap holds that to 8 percent above $11.50, which is $12.42. Rounding up would give $12.45, past the cap, so it rounds down to $12.40.
  • The higher amount is $12.40, a raise of 7.8 percent.

On today's numbers, then, the first computed rate would be $12.40, not $12.85. The cap spreads the climb to the target over more than one year. The real rate for that first year depends on the wage survey and prices published in 2029, and Iowa's median will have moved by then.

Why 55 percent. Today Iowa's minimum is 31 percent of the state median. Half the median would be $11.67, about what Minnesota ($11.41) and South Dakota ($11.85) pay now. Nebraska and Missouri are at $15.00 and Illinois at $15. Britain's government treats two-thirds of median hourly earnings as its benchmark (UK government), though it measures earnings a different way. 55 percent sits above our northern neighbors and well short of Britain. We found no U.S. state that ties its minimum to a share of its own median wage. That was a search that came up empty, not proof there isn't one. The closest model is federal: the federal Raise the Wage Act, filed in 2021, would have raised the federal minimum in steps and then grown it "at the same rate as median hourly wages" (CBO).

Why a cap. Each fixed step is a bigger jump than 8 percent. After that, the cap keeps a jump in the survey, or a change in how BLS runs it, from moving the floor by double digits in one January. Prices get no cap. If inflation runs hot, the minimum keeps pace.

Small businesses, new hires and tipped workers

Small employers. An employer with fewer than 20 employees, averaged over the year before, pays $7.25 through December 31, 2028, $10.00 from January 1, 2029, and $11.50 from January 1, 2030. From January 1, 2031, it catches up under the same limit. Each year its rate rises by inflation or by 8 percent, whichever is more, but never past everyone else's. While the 8 percent limit is what sets everyone else's rate, the small rate takes the same steps a year late, so small employers stay one year behind. They close the gap only after the limit stops setting everyone else's rate. One path, to show how that plays out: say prices keep rising 3.4 percent a year and Iowa's median wage grows 3 percent a year from today's $23.34. That's an assumption, not a forecast. Everyone else would pay $12.40 in 2030, $13.35 in 2031, $14.40 in 2032, and $15.35 in 2033, and each year a small employer would pay what everyone else paid the year before. In 2034 the small rate would be $15.55, against $15.90, and in 2035, both would be $16.45. If Iowa's wages grow faster, the limit holds longer: at 3.5 percent a year, they meet in 2036. Inflation above 8 percent for more than a year would keep the gap open too, because both rates would then rise with prices. Once they meet, small employers pay the same as everyone. Part-time and seasonal workers count, workers in other states count, and so do the workers of every business under the same ownership, so a chain can't split itself into small pieces. Iowa law already says a franchise company isn't the employer of a franchisee's workers (section 91D.1). So a franchised store counts its own workers and those of other stores its owner controls, not the whole brand. A small city or school district with fewer than 20 employees gets the extra year too. A brand-new business counts by its average so far that year. A business that shrinks under 20 doesn't get a lower minimum than it paid the year before. An employer that claims the extra year has to prove it qualifies.

New hires. Iowa law lets an employer pay $6.35 to a new hire for the first 90 days, but federal law requires $7.25 for most workers. Under the bill, it's 85 percent of the minimum, rounded up to the next five cents: $8.50 at the first step and $9.80 at the second, and never less than today's $6.35. No one can be rehired by the same employer, or a business under the same ownership, within a year of their last job there to start that clock over. The bill keeps today's rule that an employer pays the federal minimum when it's higher.

Tipped workers. Today an employer can count tips for up to 40 percent of the minimum, so the cash wage is $4.35 an hour (Iowa Workforce Development poster). The bill keeps that share, so the cash wage is 60 percent of the minimum: $6.00 at the first step and $6.90 at the second. If a worker's tips for the week come up short of what the employer counted, the employer pays the difference. Today's law lets a worker appeal. The bill also says it outright.

The math

What it costs and who pays

Today

  • Iowa's minimum wage today
    $7.25
  • What that wage bought when it was set, at today's prices
    $11.52
  • The pay line one job in ten in southeast Iowa sits at or under
    $13.49

Set in the bill

  • First step of the bill
    $10.00
  • Second step of the bill
    $11.50

The yearly formula, on today's numbers

  • Fifty-five percent of Iowa's median wage today
    $12.84
Each bar starts at zero, and they all share one scale. A pale band is a range; the analysis below says how it was built.

This bill appropriates nothing and creates no tax credit, so it stays off the Pay As You Go Act's scorecard, the same way the LABOR Act does. Employers pay the raise. We have no estimate of what it adds to Iowa's private payroll, and we haven't made one up.

The state as an employer. Iowa's minimum wage law covers public agencies too (section 91D.1). In the state's own pay plan for non-union jobs this budget year, the lowest pay grade starts at $7.25 an hour, and the grades up through one that starts at $11.40 begin below the second step (Department of Administrative Services). A grade's starting rate isn't what anyone is actually paid. We haven't counted how many state workers, if any, are paid under $10.00 or $11.50. That cost is unknown, not zero.

Cities, counties and schools. The same goes for local governments: seasonal park workers, lifeguards, part-time help. We don't know how many are paid under the new rates. County election workers are paid at least the state minimum by law (section 49.20), so their pay floor rises too. Because it may cost local governments money, the bill says it may be a state mandate under Iowa's mandates law (section 25B.3), and it turns off the part of that law that would let a city, county, township, school district, community college or area education agency decline an unfunded mandate (section 25B.2). A minimum wage that a city could opt out of wouldn't be a minimum.

Medicaid and state contracts. Home care agencies, nursing homes and other providers are paid through Medicaid at rates the state sets. If some of their workers are paid under the new rates, they'll ask the state for higher rates, and contractors will build it into their bids. We found no count of those workers. Unknown, not zero.

If the bill were filed, the Legislative Services Agency would write a fiscal note, and that's where the public cost should be settled before a vote.

What it doesn't do

It isn't a living wage. MIT's living wage calculator estimates a single adult with no children in Iowa needs $21.29 an hour (MIT). That's a model of what it costs to get by, not a government statistic, and this bill doesn't get anywhere near it. What we'd do instead: if voters want the floor closer, a later session can raise the target from 55 percent of the median to 60 percent. On today's median that's about $14.00.

It keeps the small-business exemption. An enterprise with gross sales under $300,000 a year is outside Iowa's minimum wage law today (section 91D.1), and stays outside it. Its workers are covered only by federal law, where federal law reaches them. We left it alone so this bill is about one thing.

It keeps the ban on local minimum wages. In 2017, House File 295 barred counties and cities from setting their own minimum wage and voided the ones already passed (sections 331.304 and 364.3). Wapello County's supervisors had voted for a county minimum wage on September 13, 2016. (Wapello County minutes.) It didn't have the whole county behind it. The Ottumwa Courier reported at the time that Ottumwa, Agency, Eldon and Eddyville passed resolutions against it (Ottumwa Courier). At that meeting, the minutes record a small-business owner telling the supervisors "we're not in Cedar Rapids or Iowa City," and, in the same remarks, "I'm all for a raise in the minimum wage, it's time." The minutes paraphrase speakers, so those are the clerk's words for what he said. His point about the cities is fair, and it's part of why this bill sets one statewide floor tied to Iowa's own wages instead of a patchwork. I would vote to let counties and cities set their own again, in a separate bill.

Open questions

What we don't know yet

No published table counts Iowa workers under $10.00 or $11.50, and I haven't built one, so I can't say how many Iowans get a raise from this bill.

Not many Iowans are paid the minimum. In 2024, about 0.7 percent of hourly workers were paid $7.25 or less, and the count is rough.

I can't promise indexing lasts. Missouri voters passed a yearly cost-of-living raise in 2024, and in 2025, the Missouri legislature took it out, so the raises stop at $15.00 (Missouri law today and before the change). Nebraska voters tied their minimum to prices in 2022, and in 2026, the Nebraska legislature swapped that for a flat 1.75 percent a year (Nebraska law). South Dakota's index, which voters passed in 2014, with 55 percent of the vote, still stands (South Dakota Secretary of State, South Dakota law). Iowa has no ballot initiative, so this can only pass through the Legislature, and a later Legislature could undo it the same way.

"Iowa's own wages" means the federal survey's median for jobs in Iowa. That survey leaves out the self-employed and farms, and counts tips as pay (BLS technical notes), so it isn't every paycheck in the state.

We found no Iowa estimate of how many families this lifts out of poverty.

Who gives something up

The tradeoffs

Some economists find job losses. When the Congressional Budget Office studied raising the federal minimum in steps through 2025, it found that a $10 minimum would have almost no effect on jobs (CBO). A $12 minimum would leave about 300,000 more people jobless in an average week, with a likely range from about zero to 800,000, and a $15 minimum about 1.3 million. CBO also said employment responds more to raises that keep adjusting with wage growth, which is what this bill's wage route does. The research is split. A study of 138 state increases found the number of low-wage jobs "remained essentially unchanged over five years," with "some evidence of reduced employment in tradable sectors" (Cengiz, Dube, Lindner and Zipperer). A review of the published research found "a clear preponderance of negative estimates," strongest for teens, young adults and workers with less education (Neumark and Shirley). Instead of a faster jump, I'd do steps first, a target well under Britain's, a cap on how fast the wage route moves, and an extra year for small employers, with every figure published so lawmakers can see what's happening and change course.

Southern Iowa pays less than the state as a whole. The target uses the statewide median, $23.34, and southeast Iowa's is $22.69, so the same floor takes a bigger bite here. A Wapello County business owner said as much in 2016. Instead of a separate rural rate, I'd set one floor for the whole state, well under the local median, with the extra year for small businesses. A regional rate would draw a line through somebody's town, and one employer would pay less than the one across the road.

The cap makes it slower. People who want 55 percent of the median right away won't always get it the first year, if the median has moved by then. Instead of dropping the cap, I'd keep the fixed steps on a known schedule, so workers see real money on January 1, 2028 and January 1, 2029 while the formula catches up.

Indexing can be undone. Missouri and Nebraska show it. Instead of hoping, I'd keep the formula simple, let it never go down, and publish the math every year, so taking it away is a vote people can see.

The small-business exemption leaves some workers out. Instead of reopening it in this bill, I'd hold it for a separate debate after this passes, so a fight over the smallest shops doesn't sink the raise for everybody else.

The new-hire wage could be gamed by cycling through new workers every 90 days. The bill stops an employer rehiring the same person within a year to restart the clock. Instead of trusting that, if wage complaints show employers churning new hires, I'd limit the share of hours paid at the new-hire wage. Nebraska already does this: no more than one-fourth of the hours an employer pays can be at its training wage (Nebraska law).

The public cost is unknown. The state, cities, counties, schools and Medicaid providers will pay something, and no one has priced it. Instead of guessing, I'd get the Legislative Services Agency's fiscal note before a floor vote, put the state's own share, for its own workers and the Medicaid rates it sets, in the budget, and fund a fix if the note shows a real cost to small towns.

The draft text

The draft bill language

For legislators, reporters and anyone who wants the legal wording. This is our draft, written the way Iowa bills are written, so you can see exactly what we mean. If I'm elected, the Legislature's nonpartisan drafting office, the Legislative Services Agency, writes the version that gets filed, and the wording will change. Page one and the costs above are the commitment.

Read the draft bill language

Proposed legislation

A BILL FOR

An Act relating to the state minimum wage, including steps in and annual adjustments to the state hourly wage, and including effective date provisions.

BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

Section 1. Section 91D.1, subsection 1, Code 2026, is amended by striking the subsection and inserting in lieu thereof the following:

1. a. For purposes of this section, unless the context otherwise requires:

(1) “Consumer price index” means the consumer price index for urban wage earners and clerical workers, United States city average, all items, not seasonally adjusted, as published by the bureau of labor statistics of the United States department of labor, or its successor index.

(2) “Director” means the director of the department of inspections, appeals, and licensing.

(3) “Iowa median hourly wage” means the median hourly wage for all occupations in this state, all industries, as published by the bureau of labor statistics of the United States department of labor in its occupational employment and wage statistics estimates for a May reference period, or in any successor estimates, using the most recent such estimates published before September 1 of the year in which the director makes a computation under paragraph “e”.

(4) “Small employer” means an employer that employed fewer than twenty employees, on average, during the preceding calendar year. For purposes of this subparagraph:

(a) The average is the sum of the number of individuals employed by the employer on the twelfth day of each month of the calendar year, divided by twelve. Each individual counts as one employee, whether employed full-time, part-time, or seasonally, and whether employed in this state or elsewhere.

(b) The employees of every person that controls, is controlled by, or is under common control with the employer are counted as employees of the employer. “Control” means ownership, directly or indirectly, of more than fifty percent of the voting or ownership interests of a person, or the power to direct the management and policies of a person.

(c) For an employer that was in operation during only part of the preceding calendar year, the average is computed over the months in which it was in operation. An employer that was not in operation at any time during the preceding calendar year is a small employer for a workweek during its first calendar year of operation if it employed fewer than twenty employees, on average, on the twelfth day of each month of that year that occurred after it began operation and before the workweek began or, if no such day has occurred, if it employs fewer than twenty employees on the first day of the workweek.

(d) An employer that claims to be a small employer has the burden of proving it.

b. Every employer, as defined in the federal Fair Labor Standards Act of 1938, as amended to January 1, 2007, shall pay to each of the employer’s employees, as defined in the federal Fair Labor Standards Act of 1938, as amended to January 1, 2007, the applicable state hourly wage stated in paragraph “c” or “d”, or the current federal minimum wage, pursuant to 29 U.S.C. §206, as amended, whichever is greater.

c. Except as provided in paragraph “d”, the state hourly wage shall be at least $7.25 through December 31, 2027, $10.00 as of January 1, 2028, and $11.50 as of January 1, 2029. As of January 1, 2030, and as of January 1 of each year thereafter, the state hourly wage shall be the rate computed by the director under paragraph “e”.

d. For an employee of a small employer, the state hourly wage shall be at least $7.25 through December 31, 2028, $10.00 as of January 1, 2029, and $11.50 as of January 1, 2030. As of January 1, 2031, and as of January 1 of each year thereafter, the state hourly wage for an employee of a small employer shall be the lesser of the following amounts:

(1) The state hourly wage under paragraph “c” that takes effect on the same January 1.

(2) The greater of the following amounts, each computed from the state hourly wage for an employee of a small employer in effect on the preceding December 31:

(a) That wage increased by the same percentage, if any, used under paragraph “e”, subparagraph (1), subparagraph division (a), for the rate that takes effect under paragraph “c” on the same January 1, rounded up to the nearest multiple of five cents.

(b) One hundred eight percent of that wage, rounded down to the nearest multiple of five cents.

Whether an employer is a small employer is determined separately for each calendar year, except as provided in paragraph “a”, subparagraph (4), subparagraph division (c). The state hourly wage that applies to an employer under paragraph “c” or “d” shall not be less than the state hourly wage that applied to the employer on the preceding December 31.

e. (1) On or before September 1, 2029, and on or before September 1 of each year thereafter, the director shall compute the state hourly wage that takes effect under paragraph “c” on the following January 1. The rate shall be the greater of the following amounts:

(a) The state hourly wage in effect under paragraph “c” on the date of the computation, increased by the percentage, if any, by which the consumer price index for July of the year in which the computation is made exceeds the consumer price index for July of the preceding year, rounded up to the nearest multiple of five cents.

(b) Fifty-five percent of the Iowa median hourly wage, but not more than one hundred eight percent of the state hourly wage in effect under paragraph “c” on the date of the computation, rounded up to the nearest multiple of five cents. However, if the amount so rounded up would be more than one hundred eight percent of the state hourly wage in effect under paragraph “c” on the date of the computation, the amount shall instead be rounded down to the nearest multiple of five cents.

(2) The rate computed under this paragraph shall not be less than the state hourly wage in effect under paragraph “c” on the date of the computation.

(3) If the consumer price index for July of either year has not been published on the date of the computation, the director shall use the consumer price index for the most recent month for which the index has been published for both that month and the same month of the preceding year.

f. For purposes of determining whether an employee of a restaurant, hotel, motel, inn, or cabin, who customarily and regularly receives more than thirty dollars a month in tips is receiving the minimum hourly wage rate prescribed by this section, the amount paid the employee by the employer shall be deemed to be increased on account of the tips by an amount determined by the employer, not to exceed forty percent of the applicable minimum wage. If the tips an employee actually receives in a workweek are less than the amount by which the employer increased the employee’s wage on account of tips for that workweek, the employer shall pay the employee the difference. An employee may file a written appeal with the director if the amount of tips received by the employee is less than the amount determined by the employer under this paragraph.

g. An employer is not required to pay an employee the applicable state hourly wage provided in paragraph “c” or “d” until the employee has completed ninety calendar days of employment with the employer. An employer shall pay an employee who has not completed ninety calendar days of employment with the employer an hourly wage of at least eighty-five percent of the applicable state hourly wage, rounded up to the nearest multiple of five cents, but not less than $6.35. This paragraph does not apply to an employee who was employed by the employer, or by a person whose employees are counted as employees of the employer under paragraph “a”, subparagraph (4), subparagraph division (b), at any time during the twelve months before the employee’s most recent date of hire.

h. On or before September 1, 2027, and on or before September 1 of each year thereafter, the director shall publish on the internet site of the department of inspections, appeals, and licensing the following rates for the next calendar year: the state hourly wage under paragraph “c”; the state hourly wage for an employee of a small employer under paragraph “d”; the hourly wage for an employee who has not completed ninety calendar days of employment under paragraph “g”, for employees of small employers and of other employers; and the least hourly wage an employer may pay an employee under paragraph “f”, before tips are counted. For a rate computed under paragraph “e”, the director shall publish with it the index values and the Iowa median hourly wage used, and the amount under each subparagraph division of paragraph “e”, subparagraph (1). For a rate for an employee of a small employer under paragraph “d”, subparagraph (2), the director shall publish with it the amount under each of that subparagraph’s divisions. The director shall make available a notice of the rates in effect, and every employer subject to this section shall post the notice in a conspicuous place at each worksite where employees can readily see it.

Sec. 2. IMPLEMENTATION OF ACT. Section 25B.2, subsection 3, shall not apply to this Act.

Sec. 3. EFFECTIVE DATE. This Act takes effect July 1, 2027.

EXPLANATION

The inclusion of this explanation does not constitute agreement with the explanation’s substance by the members of the general assembly.

This bill relates to the state minimum wage in Code section 91D.1 (minimum wage requirements —— exceptions).

STATE HOURLY WAGE. Under current law, the state hourly wage is $7.25, the rate set as of January 1, 2008, with no later increase, and an employer pays the greater of that rate or the federal minimum wage. The bill strikes and rewrites the subsection of Code section 91D.1 that sets the state hourly wage, the tip credit, and the wage for new employees. The state hourly wage remains $7.25 through December 31, 2027, rises to $10.00 on January 1, 2028, and to $11.50 on January 1, 2029. Beginning January 1, 2030, the director of the department of inspections, appeals, and licensing (director) sets the rate each year, computing it by September 1 of the preceding year, the first time by September 1, 2029. The new rate is the greater of the prior rate increased by the change in the consumer price index for urban wage earners and clerical workers from July to July, or fifty-five percent of the median hourly wage for all occupations in Iowa in the most recent federal occupational employment and wage statistics estimates, except that the second amount may not exceed the prior rate by more than 8 percent. Each amount is rounded up to the nearest multiple of five cents, except that the second amount is rounded down when rounding up would carry it past that limit. The rate may never decrease. An employer still pays the federal minimum wage if it is higher.

SMALL EMPLOYERS. An employer with fewer than twenty employees on average during the preceding calendar year, counting the employees of affiliated businesses under common control, reaches each step one year later: $10.00 on January 1, 2029, and $11.50 on January 1, 2030. Beginning January 1, 2031, a small employer pays the rate for other employers, but not more than the greater of the statewide rate for employees of small employers in effect at the end of the preceding year, increased by the change in the consumer price index, rounded up to the nearest multiple of five cents, or that statewide rate increased by 8 percent, rounded down to the nearest multiple of five cents, so that it catches up to the rate for other employers over time. An employer that was not in operation during the preceding calendar year is a small employer in a workweek of its first year if its average number of employees in the months of that year before that workweek, or its number of employees on the first day of the workweek if no month has yet been counted, is fewer than twenty. No employer's applicable rate may be less than the rate that applied to it at the end of the preceding year.

NEW EMPLOYEES. Under current law, an employer may pay a new employee $6.35 an hour for the first ninety calendar days of employment, but must still pay the federal minimum wage, $7.25 an hour for most employees, when it applies and is higher. The bill sets that wage at eighty-five percent of the applicable state hourly wage, rounded up to the nearest multiple of five cents, and not less than $6.35. The new-employee wage does not apply to a person the same employer, or an affiliated business, employed during the twelve months before the person’s most recent date of hire.

TIPPED EMPLOYEES. The bill keeps the existing tip credit, which counts tips toward the minimum wage for up to 40 percent of the applicable minimum wage, and requires an employer to pay the difference when an employee’s tips in a workweek fall short of the credit the employer took.

PUBLICATION AND ENFORCEMENT. By September 1 of each year, beginning in 2027, the director publishes each rate for the next calendar year, with the figures used to compute it, and every covered employer must post a notice of the rates where employees can see it. The bill does not change the exemption for an enterprise with annual gross sales of less than $300,000, the other exemptions in Code section 91D.1, or enforcement under Code chapter 91A (wage payment collection). The bill does not change the prohibition on county and city minimum wage ordinances in Code section 331.304 (procedural limitations on general county powers) and Code section 364.3 (limitation of powers).

The bill makes no appropriation and allows no tax credit.

The bill may include a state mandate as defined in Code section 25B.3 (definitions). The bill makes inapplicable the part of Code section 25B.2 (findings and purpose —— effect of unfunded state mandate) that would relieve a political subdivision from complying with a state mandate if adequate funding is not provided.

The bill takes effect July 1, 2027.

Sources

Where every number comes from

For anyone checking our work. Each figure with the site it came from and the day we checked it, and each law the bill cites.

Show every source

Figures

  • $7.25Iowa's minimum has been $7.25 since January 1, 2008.legis.iowa.govchecked 2026-10-02
  • $7.25New hires. Iowa law lets an employer pay $6.35 to a new hire for the first 90 days, but federal law requires $7.25 for most workers.law.cornell.educhecked 2026-10-02
  • $6.35New hires. Iowa law lets an employer pay $6.35 to a new hire for the first 90 days, but federal law requires $7.25 for most workers.legis.iowa.govchecked 2026-10-02
  • 40 percentTipped workers keep today's deal. Tips can count for up to 40 percent of the minimum.legis.iowa.govchecked 2026-10-02
  • $4.35Tipped workers are the exception: the survey counts their tips, but their cash wage rises, from $4.35 to $6.00, then $6.90.workforce.iowa.govchecked 2026-10-02
  • $300,000Businesses with sales under $300,000 a year stay exempt, as now.legis.iowa.govchecked 2026-10-02
  • $23.34The job right in the middle, the median, paid $23.34 statewide and $22.69 in southeast Iowa (BLS wage survey).data.bls.govchecked 2026-10-02
  • $13.91In the federal wage survey for May 2025, one Iowa job in ten paid $13.91 an hour or less, and in southeast Iowa outside the metro areas, which takes in Appanoose, Davis, Monroe and Wapello counties, one in ten paid $13.49 or less.data.bls.govchecked 2026-10-02
  • $22.69The job right in the middle, the median, paid $23.34 statewide and $22.69 in southeast Iowa (BLS wage survey).data.bls.govchecked 2026-10-02
  • $13.49In the federal wage survey for southeast Iowa outside the metro areas, including Appanoose, Davis, Monroe and Wapello counties, one job in ten paid $13.49 an hour or less.data.bls.govchecked 2026-10-02
  • 6,000The Bureau of Labor Statistics counted about 6,000 Iowa workers paid by the hour at or below the federal minimum in 2024, out of 858,000 paid by the hour, or 0.7 percent (BLS).bls.govchecked 2026-10-02
  • 858,000The Bureau of Labor Statistics counted about 6,000 Iowa workers paid by the hour at or below the federal minimum in 2024, out of 858,000 paid by the hour, or 0.7 percent (BLS).bls.govchecked 2026-10-02
  • 0.7 percentThe Bureau of Labor Statistics counted about 6,000 Iowa workers paid by the hour at or below the federal minimum in 2024, out of 858,000 paid by the hour, or 0.7 percent (BLS).bls.govchecked 2026-10-02
  • $11.41Half the median would be $11.67, about what Minnesota ($11.41) and South Dakota ($11.85) pay now.dli.mn.govchecked 2026-10-02
  • $11.85Half the median would be $11.67, about what Minnesota ($11.41) and South Dakota ($11.85) pay now.dlr.sd.govchecked 2026-10-02
  • $15.00Nebraska and Missouri are at $15.00 and Illinois at $15.nebraskalegislature.govchecked 2026-10-02
  • 1.75 percentNebraska voters tied their minimum to prices in 2022, and in 2026, the Nebraska legislature swapped that for a flat 1.75 percent a year (Nebraska law).nebraskalegislature.govchecked 2026-10-02
  • $15.00Missouri voters passed a yearly cost-of-living raise in 2024, and in 2025, the Missouri legislature took it out, so the raises stop at $15.00 (Missouri law today and before the change).revisor.mo.govchecked 2026-10-02
  • $15Nebraska and Missouri are at $15.00 and Illinois at $15.ilga.govchecked 2026-10-02
  • $7.25Wisconsin's minimum wagedocs.legis.wisconsin.govchecked 2026-10-02
  • 55 percentSouth Dakota's index, which voters passed in 2014, with 55 percent of the vote, still stands (South Dakota Secretary of State, South Dakota law).sdsos.govchecked 2026-10-02
  • $21.29MIT estimates a single adult with no kids in Iowa needs $21.29 an hour.livingwage.mit.educhecked 2026-10-02
  • $7.25In the state's own pay plan for non-union jobs this budget year, the lowest pay grade starts at $7.25 an hour, and the grades up through one that starts at $11.40 begin below the second step (Department of Administrative Services).das.iowa.govchecked 2026-10-02
  • $11.40In the state's own pay plan for non-union jobs this budget year, the lowest pay grade starts at $7.25 an hour, and the grades up through one that starts at $11.40 begin below the second step (Department of Administrative Services).das.iowa.govchecked 2026-10-02
  • $10Some economists find job losses. When the Congressional Budget Office studied raising the federal minimum in steps through 2025, it found that a $10 minimum would have almost no effect on jobs (CBO).cbo.govchecked 2026-10-02
  • $12A $12 minimum would leave about 300,000 more people jobless in an average week, with a likely range from about zero to 800,000, and a $15 minimum about 1.3 million.cbo.govchecked 2026-10-02
  • 300,000A $12 minimum would leave about 300,000 more people jobless in an average week, with a likely range from about zero to 800,000, and a $15 minimum about 1.3 million.cbo.govchecked 2026-10-02
  • 800,000A $12 minimum would leave about 300,000 more people jobless in an average week, with a likely range from about zero to 800,000, and a $15 minimum about 1.3 million.cbo.govchecked 2026-10-02
  • $15A $12 minimum would leave about 300,000 more people jobless in an average week, with a likely range from about zero to 800,000, and a $15 minimum about 1.3 million.cbo.govchecked 2026-10-02
  • 1.3 millionA $12 minimum would leave about 300,000 more people jobless in an average week, with a likely range from about zero to 800,000, and a $15 minimum about 1.3 million.cbo.govchecked 2026-10-02
  • 138A study of 138 state increases found the number of low-wage jobs "remained essentially unchanged over five years," with "some evidence of reduced employment in tradable sectors" (Cengiz, Dube, Lindner and Zipperer).nber.orgchecked 2026-10-02
  • 206.744Consumer price index for wage earners (CPI-W), January 2008data.bls.govchecked 2026-10-02
  • 328.481Consumer price index for wage earners (CPI-W), August 2026data.bls.govchecked 2026-10-02
  • 316.349Consumer price index for wage earners (CPI-W), July 2025data.bls.govchecked 2026-10-02
  • 327.104Consumer price index for wage earners (CPI-W), July 2026data.bls.govchecked 2026-10-02

Laws cited

  • 91D.1Minimum wage requirements and exceptions. Sets Iowa's hourly wage at $7.25 as of January 1, 2008, with no index; requires the greater of that or the federal minimum; allows a tip credit of up to forty percent and a lower wage for the first ninety days; exempts enterprises with gross sales under three hundred thousand dollars, except laundries, construction, hospitals and care institutions, schools and public agencies; says a franchisor is not the employer of a franchisee's employees; has the director of the department of inspections, appeals, and licensing adopt rules; and is enforced under chapter 91A. legis.iowa.gov
  • 49.20Compensation of election board members. They are temporary state employees paid by the county at a rate the board of supervisors sets, "not less than the minimum wage established in section 91D.1, subsection 1, paragraph "b"". The bill keeps paragraph "b" as the pay-the-greater rule, so this cross-reference still works and county election pay rises with the new rates. legis.iowa.gov
  • chapter 91AWage payment collection. How and when wages are paid, and how unpaid wages, including minimum wages, are recovered, with liquidated damages. legis.iowa.gov
  • 10A.202Labor services. The department of inspections, appeals, and licensing administers the laws in chapters 91A and 91D, among others; the labor commissioner's division runs occupational safety (chapters 88 and 89B). legis.iowa.gov
  • 25B.2Unfunded state mandates. Subsection 3 lets a political subdivision decline a state mandate enacted after July 1, 1994, that the state does not fully fund, unless the legislation says otherwise. Section 2 of the bill makes it inapplicable. legis.iowa.gov
  • 25B.3Defines "political subdivision" as a city, county, township, or school district (25B.2(3)(c) adds community colleges and area education agencies for the opt-out rule), and "state mandate": a statutory requirement that makes political subdivisions expand or modify their activities at an added combined cost of local revenue of at least one hundred thousand dollars a year, or five hundred thousand dollars within five years of enactment. legis.iowa.gov
  • 331.304Procedural limitations on general county powers. Subsection 12 bars a county from any ordinance on terms or conditions of employment that exceed or conflict with federal or state law on "a minimum or living wage rate", and voids earlier ones. legis.iowa.gov
  • 364.3Limitation of powers (cities). Subsection 12 bars a city from any ordinance on terms or conditions of employment that exceed or conflict with federal or state law on "a minimum or living wage rate", and voids those adopted before March 30, 2017. legis.iowa.gov
  • HF 295The 2017 act (enrolled) prohibiting counties and cities from establishing certain regulations relating to employment matters and the sale or marketing of consumer merchandise. It added the minimum wage bar to the county and city home rule limitations and made existing local ordinances void and unenforceable. legis.iowa.gov