Iowa Changes to Itemize Deductions
As of the 2025 tax year, Iowa continues to allow taxpayers to itemize deductions on their state income tax return, Form IA 1040. However, Iowa does not offer a standard deduction for individual taxpayers, meaning all taxpayers must itemize their deductions if they wish to claim any. This differs from the federal system, where taxpayers can choose between itemizing or taking the standard deduction.
Key Deductions Available in Iowa
Iowa provides several specific deductions for capital gains, particularly for certain types of property and business activities. These deductions are claimed using various IA 100 series forms, which are designed to reduce taxable income for eligible taxpayers.
- Form IA 100B – Capital Gain Deduction for Real Property Used in a Farm Business
- Form IA 100C – Capital Gain Deduction for Real Property Used in a Non-Farm Business
- Form IA 100D – Capital Gain Deduction for Timbers
- Form IA 100E – Capital Gain Deduction for a Business
- Form IA 100F – Capital Gain Deduction for ESOP (Employee Stock Ownership Plan)
- Form IA 100G – Capital Gain Deduction for Retired Farmers
- Form IA 100H – Capital Gain Deduction for Real Property Used in a Farming Business
- Form IA 100J – Capital Stock Election Deduction
Taxpayers must meet specific eligibility criteria to claim these deductions. For example, Form IA 100G is only available to retired farmers who meet age and farming experience requirements. Similarly, Form IA 100C is limited to installment sales occurring before January 1, 2023.
How to Claim These Deductions in Online Taxes Software
To claim any of the above deductions using Online Taxes (OLT) software:
- From within your tax return (Online), click on "State" in the left menu.
- Select "Start or Revisit Iowa state."
- Under the "Return Checklist" section, click "Start or Edit" near "Iowa Capital Gain Deduction (Forms IA 100 A-J)."
- Select the specific form (e.g., IA 100B, IA 100C, etc.) and follow on-screen instructions.
For other state-specific adjustments, such as Iowa Lump-Sum Tax or Contributions, navigate to the respective sections (Taxes or Payments) within the Iowa state return section of the software.
Important Notes
- Iowa does not provide a standard deduction; all deductions must be itemized.
- Deductions are subject to specific eligibility rules and income thresholds.
- The Iowa Department of Revenue provides detailed instructions for each form. Always verify eligibility and requirements using official resources.
Source:
Form IA 100G - Capital Gain Deduction — Retired Farmers
Form IA 100C - Capital Gain Deduction — Real Property Used in a Non-Farm Business
Form IA 100J - Capital Stock Election Deduction
Form IA 100H - Capital Gain Deduction for Real Property Used in a Farming Business
Iowa State Instruction - Individual Income Tax Forms
Disclaimer: Always verify information with official Federal or State Department of Revenue Forms and Instructions before filing your return.