The suit alleged that Microsoft used its strong market position to overcharge customers for copies of Office, MS-DOS and nearly every version of its operating system since Windows 95.
Under the terms of the settlement, users who purchased the products between 18 May 1994 and 30 June 2006 are entitled to compensation from Microsoft. Half of any unclaimed funds will then be given to the state's department of education.
The Iowa suit is among the last of 19 antitrust cases brought against Microsoft by US states in the late 1990s.
Many of the states decided to abandon their cases in favour of the large federal antitrust motion brought by the US Department of Justice.
The Iowa court is scheduled to make a decision on whether to approve the terms of the settlement on 20 April.
If approved, Microsoft would be left with one remaining state antitrust case from the late 1990s, a suit filed in Mississippi. A motion for dismissal in that case is pending, the company said.
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