Iowa Contractor License Bond$5,000-$25,000 DIAL Required

All contractors are required to carry a $25,000 bond if they have a principal place of business outside Iowa OR if they have employees. Having a branch office in Iowa does not exempt you. Plumbing/HVAC contractors need a separate $5,000 bond per Iowa Code 105.19. The bond guarantees payment of taxes and other obligations to the State of Iowa.

For the $25,000 bond, expect $250-$750 annually (1-3%) with good credit. The $5,000 plumbing/HVAC bond costs $75-$150 annually. Poor credit may increase rates to 5-10%. Bonds are continuous until a cancellation notice is received, so renewals do not require a new bond filing.

Any contractor earning $2,000 or more annually from construction must register with DIAL. Exemptions include those making less than $2,000/year or working only on their own property. Both individual contractors and construction companies must register. Failure to register can result in $500 citations for first violations and up to $5,000 for repeat offenses.

The bond must be issued on the official DIAL Bond Form by a surety company licensed to do business in Iowa. When you order your bond through us, we issue it on the correct DIAL form automatically. The bond is continuous -- renewals do not need to complete a new bond step as long as the surety has not issued a cancellation notice.

Yes. The $25,000 contractor registration bond is a tax-guarantee bond. Only the State of Iowa and its agencies may collect on it. It guarantees payment of taxes, penalties, and other payments due to the state. This is different from consumer-protection bonds found in other states.

Iowa penalties include a $500 citation for the first violation and up to $5,000 for repeat violations. The state can also pursue civil penalties and may require you to stop all work until properly registered and bonded. Both registration and bonding must be current before starting any construction work.