Iowa: Prejudgment Interest Rules
The short answer
Yes. Iowa uses one unified formula for both contract and tort money judgments: interest accrues from the date the lawsuit was filed, at the one-year Treasury constant-maturity rate published by the Federal Reserve just before judgment, plus 2%. The rate is fixed as of the judgment date and floats month to month, so it must be checked at the time of judgment rather than assumed. Interest is mandatory, not discretionary, and it's simple interest, not compounding. There is one sharp exception: a tort claim against the State of Iowa itself draws no prejudgment interest at all.
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This is the general rule in Iowa. Ask about your specific facts and see which parts of current Iowa law apply, with citations to the statutes.
| Governing law | Iowa Code § 535.3(1)(a) (cross-refers to the rate) and § 668.13 (accrual/rate mechanics); applied to both contract and tort judgments |
|---|---|
| Interest rate | 1-year Treasury constant-maturity rate immediately before judgment plus 2%; Aug. 10, 2026 benchmark is 4.06%, producing 6.06% if that row applies |
| When interest starts running | From the date the lawsuit was filed (commencement of the action); interest on future damages starts only at entry of judgment |
| Contract vs. tort claims | Unified — the same accrual rule and rate formula (§§ 535.3(1)(a), 668.13) now applies to both contract and tort money judgments |
| Mandatory or discretionary | Mandatory; both statutes say interest 'shall' be allowed once a money judgment is entered |
| Simple or compound | Simple interest; the statute directs interest to be 'computed daily to the date of the payment,' with no compounding language |
| Claims against the government | Barred entirely against the State of Iowa on a tort claim; interest runs only from the date of judgment forward (Iowa Code § 669.4(2)) |
| Other exceptions | Punitive damages barred against the state; future-damages interest starts at judgment, not filing; a contract's own fixed rate controls instead (capped by § 535.2's usury ceiling); workers'-compensation and support payments use separate rate rules outside this survey's scope |
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Requirements one by one
Sections 535.3 and 668.13 work together
Iowa Code § 535.3(1)(a) allows interest on all money due on court judgments
and sends the rate calculation to § 668.13. Section 668.13 then supplies the
accrual date, contract-rate exception, benchmark formula, future-damages rule,
and daily computation method. That cross-reference matters because § 668.13
sits in the comparative-fault chapter even though § 535.3 applies its rate to
money judgments generally.
The judgment date fixes a benchmark-plus-two rate
Section 668.13(3) uses the one-year Treasury constant-maturity rate settled
immediately before judgment, plus two percentage points. The Iowa Judicial
Branch table lists 4.06% for the August 10, 2026 benchmark row. If that is the
row immediately preceding judgment, the computed statutory rate is 6.06%.
A contract's own fixed rate controls instead, subject to § 535.2's ceiling.
Filing starts the clock, except for future damages
Under § 668.13(1), ordinary interest starts on commencement of the action.
Section 668.13(4) delays interest on future damages until entry of judgment.
Section 668.13(5) requires daily computation through payment and does not
authorize interest-on-interest compounding.
State tort claims have a complete prejudgment bar
Iowa Code § 669.4(2) says the state is not liable for interest before judgment
or for punitive damages on a claim under the Iowa Tort Claims Act. The Iowa
Supreme Court applied that text in Hook v. Trevino: prejudgment interest is
unavailable, and interest runs from judgment instead.
What trips people up
The published table shows the benchmark, not the finished rate. Add the two
percentage points required by § 668.13(3); do not use 4.06% by itself for the
August 10 row.
The current row is not a permanent rate. The rate is fixed by the benchmark
settled immediately before the actual judgment date, so a pretrial estimate can
become stale.
Future damages use a different start date. The filing-date rule does not
reach that component until judgment is entered.
Common questions
Does a contract rate override the statutory formula?
Yes, if the judgment is rendered on that contract. Section 668.13(2) uses the
contract rate, subject to the maximum permitted by § 535.2.
Is the August 2026 rate 4.06% or 6.06%?
The table's August 10 benchmark is 4.06%. Adding the statute's two percentage
points produces 6.06% if that benchmark is the one immediately before judgment.
Does the state-tort bar also decide claims against a city or county?
No. Section 669.4(2) addresses claims against the State of Iowa under the state
tort-claims chapter. A local-government claim needs its own authority analysis.
Statutes and sources
- Iowa Code § 535.3(1)(a) — interest on money judgments and the
§ 668.13 cross-reference:
https://www.legis.iowa.gov/docs/code/535.3.pdf (accessed 2026-08-10). - Iowa Code § 668.13 — accrual, contract rate, benchmark formula,
future damages, and daily computation:
https://www.legis.iowa.gov/docs/code/668.13.pdf (accessed 2026-08-10). - Iowa Code § 669.4(2) — state-tort interest and punitive-damages bar:
https://www.legis.iowa.gov/docs/code/669.4.pdf (accessed 2026-08-10). - Hook v. Trevino, 839 N.W.2d 434, 448 (Iowa 2013) — state-tort
prejudgment-interest treatment:
https://www.iowacourts.gov/moduledocuments/embed/2746/120283_466CDB58F42E4.pdf
(accessed 2026-08-10). - Iowa Judicial Branch, Post Judgment Interest Table — current Treasury
benchmark rows and the statutory plus-two explanation:
https://www.iowacourts.gov/iowa-courts/district-court/post-judgment-interest-table
(accessed 2026-08-10).
Source links
Every statute quoted above, linked, with the date we checked it.
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