Iowa tip pooling laws & tipped minimum wage
In Iowa, employers can pay tipped workers $4.35/hr as long as tips bring them to the $7.25 minimum — here's how that works and who can legally share your tips.
| Regular minimum wage | $7.25/hr |
| Minimum cash wage for tipped workers | $4.35/hr |
| Maximum tip credit | $2.90/hr |
| Tips belong to | Employees — always |
A tip credit lets an employer count your tips toward the minimum wage it owes you. Rates reviewed July 2026. Rates change — confirm with the Iowa labor department. Not legal advice.
Iowa follows the federal wage, and the tipped rate applies only above $30 a month in tips
Iowa sets its minimum wage at the federal $7.25 an hour. For tipped workers, Iowa Code Chapter 91D allows a cash wage of $4.35, with the employer taking a tip credit of up to $2.90, provided your tips bring the total to at least $7.25 an hour.
Iowa’s tip credit is narrower than the federal one. State law caps it at 40 percent of the minimum wage, which is why the cash wage floor is $4.35 rather than the $2.13 used in most states. The lower cash wage only applies if you customarily and regularly earn more than $30 a month in tips; below that threshold, you are entitled to the full $7.25 cash wage.
Iowa cities cannot set a higher minimum wage
Several Iowa counties, including Polk, Linn, Johnson, and Wapello, raised local minimum wages between 2015 and 2017. In 2017 the Legislature passed a law barring cities and counties from setting wage, hour, or benefit rules stricter than the state’s, which rolled those local increases back.
The practical effect is a single statewide floor. Wherever you work in Iowa, the tipped cash wage stays $4.35 and the full minimum stays $7.25.
If your tips fall short, your employer owes the difference
The tip credit does not let an employer pay you below minimum wage. In any workweek where your $4.35 cash wage plus tips do not average at least $7.25 an hour, your employer must make up the gap in that paycheck. If that does not happen, you can file a wage claim with the Iowa Division of Labor.
Tip pooling in Iowa
Iowa follows the federal baseline: employers may require tip pooling. If your employer takes the tip credit (pays $4.35/hr cash), the pool may only include customarily tipped workers — servers, bussers, bartenders, runners, hosts. Back-of-house can only be included if everyone is paid full minimum wage with no tip credit. Managers and supervisors are always excluded.
One federal rule applies everywhere: managers and supervisors can never take from a tip pool. Separately, credit card processing fees may only be deducted from tips where state law allows it.
What this means for your tip-out
Because part of your legal wage in Iowa comes from tips, the employer's tip credit assumes those tips reached you. Use the tip-out calculator to split a shift by your house's percentages or by hours, and see standard tip-out percentages to check whether your house's rates are typical.
Iowa tip law FAQs
What is the tipped minimum wage in Iowa?
Employers in Iowa may pay tipped employees a cash wage of $4.35/hr and claim a tip credit of up to $2.90/hr toward the $7.25 minimum wage. If tips don't close the gap in a workweek, the employer must make up the difference.
Is mandatory tip pooling legal in Iowa?
Iowa follows the federal baseline: employers may require tip pooling. If your employer takes the tip credit (pays $4.35/hr cash), the pool may only include customarily tipped workers — servers, bussers, bartenders, runners, hosts. Back-of-house can only be included if everyone is paid full minimum wage with no tip credit. Managers and supervisors are always excluded.
Can my manager take a share of the tip pool in Iowa?
No. Federal law prohibits managers, supervisors, and owners from keeping any portion of employee tips in every state, including Iowa. A manager may keep only tips they directly and solely earned (e.g., a table they personally served start to finish).
Why is Iowa’s tipped cash wage $4.35 instead of $2.13?
Iowa Code Chapter 91D caps the tip credit at 40 percent of the minimum wage. Forty percent of $7.25 is $2.90, which leaves a required cash wage of $4.35 — higher than the $2.13 floor used under federal law and in many other states.
What if I earn less than $30 a month in tips?
Then you are not a tipped employee under Iowa law, and your employer cannot take the tip credit. You must be paid the full $7.25 cash minimum wage regardless of any tips you receive.