Iowa Code

Iowa Code § 421.7 (2026)

Interest rate

✓ current as of July 2026

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1. Except where a different rate of interest is stated in a provision of this Title,* the rate of interest on interest-bearing obligations arising under this Title shall be the rate of interest in effect under this section.

2. The rate of interest that shall be in effect during a calendar year shall be the rate which is two percentage points greater than the numerical average, rounded to the nearest one percent, of the respective prime rates for each of the months in the twelve-month period that ends September 30 of the previous calendar year. The rate of interest established by this subsection takes effect January 1, and applies to any amount which is due or becomes payable on or after that date.

3. Notwithstanding contrary provisions of subsection 2, the rate of interest that is in effect during a calendar year shall also be the rate of interest to be in effect for the following calendar year, unless the rate of interest as calculated under subsection 2 is at least one percentage point higher or lower than the rate then in effect.

4. In the event interest accrues or is calculated on a monthly basis, the rate of interest for each month shall be one-twelfth, rounded to the nearest one-tenth of one percent, of the rate specified in subsection 2.

5. As used in subsection 2, the term “prime rate” means the prime rate charged by banks on short-term business loans, as determined by the board of governors of the federal reserve system and published in the federal reserve bulletin.

6. In November of each year the director shall cause an advisory notice to be published in the Iowa administrative bulletin and on the internet site of the department, stating the rate of interest to be in effect on or after January 1 of the following year, as established by this section. The calculation and publication of the rate of interest by the director is exempt from chapter 17A. [S13, §1481-a23; C24, 27, 31, §7310, 7368; C35, §6943-f20, -f21, -f24, 7310, 7368; C39, §6943.056, 6943.057, 6943.060, 7310, 7368; C46, 50, 54, §422.24, 422.25, 422.28, 450.6, 450.63; C58, 62, §324.64, 422.24, 422.25, 422.28, 450.6, 450.63; C66, §324.64, 422.16(9)(10, b), 422.24, 422.25, 422.28, 422.58, 423.18, 450.6, 450.63; C71, 73, 75, §324.65, 422.16(9)(10, b), 422.24, 422.25, 422.28, 422.58, 423.18, 450.6, 450.63; C77, §324.65, 422.16(9)(10, b)(11, e), 422.24, 422.25, 422.28, 422.58, 423.18, 450.6, 450.63, 450.94; C79, §324.65, 422.16(9)(10, b)(11, e), 422.24, 422.25, 422.28, 422.58, 422.88, 423.18, 435.4, 435.6, 450.6, 450.63, 450.94, 450A.9; C81, §324.65, 422.16(9)(10, b)(11, e), 422.24, 422.25, 422.28, 422.58, 422.88, 422.91, 423.18, 435.4, 435.6, 450.6, 450.63, 450.94, 450A.9; 81 Acts, ch 131, §1] 86 Acts, ch 1007, §16; 90 Acts, ch 1172, §5; 94 Acts, ch 1023, §48; 2013 Acts, ch 70, §17; 2021 Acts, ch 86, §74; 2022 Acts, ch 1061, §57 Referred to in §184.3, 421.27, 421.60, 422.16, 422.24, 422.25, 422.88, 423.4, 423.40, 423B.8, 425.7, 425A.8, 437A.13, 437B.9, 450.6, 450.63, 452A.65, 452A.74A, 453A.28, 453A.46, 453B.12, 459.402 *This provision does not include chapters 421B, 427C, 435, 452A, and 453A, which were moved into this Title by the Code editor. Chapters 421B, 427C, 435, 452A, and 453A contain the applicable provisions pertaining to those chapters.\n\nTue Dec 09 22:12:28 2025 Iowa Code 2026, Chapter 421 (73, 4) 5 DEPARTMENT OF REVENUE, §421.9A \n

Notes of Decisions

Cited in 4 cases, 1993–2013 · leading case: State of Iowa v. Marc A. Hagen, 840 N.W.2d 140 (Iowa 2013).

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State of Iowa v. Marc A. Hagen, 840 N.W.2d 140 (Iowa 2013). · cites it 6× “The department is entitled to interest “at the rate in effect under section 421.7 for each month counting each fraction of a month as an entire month, computed from the date the return was required to be filed.”

Iowa Supreme Court Bd. of Prof'l Ethics & Conduct v. Runge, 588 N.W.2d 116 (Iowa 1999). · cites it 4× “The plea agreement also provided that Runge pay restitution for the taxes as set forth in Counts I through IV along with the 75% evasion penalty and interest to date of payment as provided in Iowa Code section 421.7. In the plea agreement, Runge represented that he could make,…”

State v. White, 545 N.W.2d 552 (Iowa 1996). · cites it 2× “The dealer shall pay interest on the tax and penalty at the rate in effect under section 421.7, counting each fraction of a month as an entire month, computed from the date of assessment through the date of payment.”

Hagge v. Iowa Dep't of Revenue & Fin., 504 N.W.2d 448 (Iowa 1993). · cites it 2× “41(3), (5) (adjusting computation of penalty under section 422.”

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