Iowa: Prejudgment Interest Rules

The short answer

Iowa doesn't split prejudgment interest between contract and tort claims the way many states do. One formula covers both: interest runs from the day the lawsuit was filed, at a rate tied to a Treasury benchmark plus 2%, fixed as of the judgment date. It's owed as a matter of right, not something a judge or jury decides to award. The one place Iowa does draw a hard line is when the defendant is the State of Iowa itself in a tort case — there, prejudgment interest doesn't apply at all.

Requirements one by one

Governing law

Two sections work together. Iowa Code § 535.3(1)(a), in the general "Money and Interest" chapter, says interest on money judgments is calculated "according to section 668.13" — which sits, somewhat confusingly, in the chapter on tort liability and comparative fault. Read on its own, § 668.13 looks tort-specific ("actions brought pursuant to this chapter"), but the Iowa Court of Appeals confirmed in 2025 that courts apply both sections together to contract judgments too, not just tort ones. So functionally, §§ 535.3(1)(a) and 668.13 form one combined prejudgment-interest statute for ordinary civil money judgments, regardless of claim type.

Interest rate

The rate isn't a flat number set by the legislature — it's tied to a moving benchmark. Under § 668.13(3), the rate equals the one-year U.S. Treasury constant-maturity rate from the Federal Reserve's H.15 report, as of the most recent auction settled before the judgment date, plus 2 percentage points. That combined rate is locked in once, as of the judgment date, and then applies to the whole prejudgment period as well as afterward — it doesn't recalculate month by month during the case. The Iowa Judicial Branch tracks the resulting rate on its own published table; the most recently confirmed figure was 5.88% (a 3.88% Treasury rate plus 2%, based on the June 2026 auction). If the parties' contract fixes its own interest rate, that rate applies instead, capped by Iowa's usury ceiling in § 535.2.

When interest starts running

Interest accrues "from the date of the commencement of the action" — the day the lawsuit (petition) was filed — not the date of the injury, breach, or demand. The one exception is future damages: § 668.13(4) delays interest on any future-damages component of an award until the judgment is actually entered, since the plaintiff had no claim to that money yet at the time of filing.

Contract vs. tort claims

Iowa didn't always treat these the same way. Before a late-1990s amendment, § 535.3 set its own flat rate for judgments outside § 668.13's reach, effectively splitting contract and tort into separate tracks. The legislature later rewrote § 535.3 to simply point to § 668.13 for the rate on any money judgment, and a 2025 Iowa Court of Appeals decision confirmed courts now apply the same accrual-from-filing rule and the same Treasury-plus-2% rate to a straightforward contract dispute as they would to a tort claim. So today, Iowa runs one unified mechanism rather than two separate statutes.

Mandatory or discretionary

Mandatory. Both § 535.3(1)(a) and § 668.13 use "shall," and Iowa courts have described prejudgment interest as compensation for the lost use of money during litigation, not a discretionary penalty a court chooses whether to impose.

Simple or compound

Simple interest. Section 668.13(5) directs that interest be "computed daily to the date of the payment" — a daily-accrual, non-compounding method. Nothing in the statute directs interest-on-interest compounding.

Claims against the government

This is Iowa's sharpest exception. Under the Iowa Tort Claims Act, § 669.4(2) says plainly that the state "shall not be liable for interest prior to judgment or for punitive damages" on a tort claim. That's a complete bar, not a lower rate — a plaintiff who wins a tort judgment against the State of Iowa collects interest only from the date of judgment forward, with nothing for the years the case was pending. Iowa's separate municipal tort claims chapter bars punitive damages against cities and counties in similar terms, but this survey did not locate an equivalent express prejudgment-interest bar specific to municipalities; absent a located carve-out, the general §§ 535.3/668.13 rule presumptively applies to local-government defendants.

Other exceptions

Beyond the state's punitive-damages and interest bar, a contractually fixed rate displaces the Treasury-based formula entirely (capped by the usury statute). Iowa also runs separate, narrower interest rules for workers'-compensation periodic payments (§ 535.3(1)(b)) and for child/spousal/medical support arrears (§ 535.3(2)), both of which sit outside this survey's contract/tort scope but are worth knowing exist under the same chapter.

What trips people up

The cross-chapter citation is the biggest trap: § 668.13 reads like a tort-only statute because it lives in the comparative-fault chapter and says "actions brought pursuant to this chapter." Someone skimming a contract case might assume it doesn't apply and miss the interest claim entirely. It takes reading § 535.3(1)(a)'s cross-reference, plus recent case law, to see that the two sections work as one rule for any money judgment.

The floating rate also catches people off guard. Because the rate resets with each Treasury auction and gets locked in only as of the judgment date, an estimate made early in a case can be wrong by the time judgment actually enters — always check the Iowa Judicial Branch's current rate table rather than reusing last year's number.

Common questions

Does Iowa treat a breach-of-contract claim differently from a personal-injury claim for prejudgment interest?
Not anymore. Both now run under the same combined statute — same accrual-from-filing rule, same Treasury-plus-2% rate — unless the parties' own contract fixes a different rate.

Can I get prejudgment interest on a judgment against the State of Iowa?
Not for a tort claim. Iowa Code § 669.4(2) bars prejudgment interest against the state entirely; interest starts only once judgment is entered.

What's Iowa's current prejudgment interest rate?
It floats. As of the most recently published figure, it was 5.88% (the one-year Treasury rate of 3.88% plus 2%), reset monthly by the state court administrator — check the Iowa Judicial Branch's rate table for the figure current at the time of judgment.

Does interest compound in Iowa?
No. It's computed daily as simple interest on the principal, with no compounding built into the statute.

Statutes and sources

• Iowa Code § 535.3(1)(a) — "Interest shall be allowed on all money due on judgments and decrees of courts at a rate calculated according to section 668.13." Accessed 2026-07-05: https://www.legis.iowa.gov/docs/code/535.3.pdf
• Iowa Code § 668.13 — "Interest shall be allowed on all money due on judgments and decrees on actions brought pursuant to this chapter, subject to the following: 1. Interest, except interest awarded for future damages, shall accrue from the date of the commencement of the action. 2. If the interest rate is fixed by a contract on which the judgment or decree is rendered, the interest allowed shall be at the rate expressed in the contract, not exceeding the maximum rate permitted under section 535.2. 3. Interest shall be calculated as of the date of judgment at a rate equal to the one-year treasury constant maturity published by the federal reserve in the H15 report settled immediately prior to the date of the judgment plus two percent. The state court administrator shall distribute notice monthly of that rate and any changes to that rate to all district courts. 4. Interest awarded for future damages shall not begin to accrue until the date of the entry of the judgment. 5. Interest shall be computed daily to the date of the payment, except as may otherwise be ordered by the court pursuant to a structured judgment under section 668.3, subsection 7." Accessed 2026-07-05: https://www.legis.iowa.gov/docs/code/668.13.pdf
• Iowa Code § 669.4(2) — "The state shall be liable in respect to such claims to the same claimants, in the same manner, and to the same extent as a private individual under like circumstances, except that the state shall not be liable for interest prior to judgment or for punitive damages." Accessed 2026-07-05: https://www.legis.iowa.gov/docs/code/669.4.pdf
• CMT Highway, LLC v. Logan Contractors Supply, Inc., No. 24-1158 (Iowa Ct. App. June 18, 2025) — confirms courts apply §§ 535.3(1)(a) and 668.13(1), (3) together to a contract (UCC) judgment, not just tort claims. Accessed 2026-07-05: https://www.iowacourts.gov/courtcases/23823/embed/CourtAppealsOpinion
• Hook v. Trevino, 2013 Iowa Sup. LEXIS 117 (Iowa Nov. 8, 2013) — "Prejudgment interest is not recoverable on tort claims against the state. Iowa Code § 669.4. Rather, interest runs from the date of the judgment." Accessed 2026-07-05 via CourtListener (legalresearch tool).
• Iowa Judicial Branch, Post-Judgment Interest Table — restates the §§ 535.3/668.13 rate mechanism and publishes the current monthly rate. Accessed 2026-07-05: https://www.iowacourts.gov/iowa-courts/district-court/post-judgment-interest-table