Iowa allows eligible taxpayers to exclude certain retirement income from Iowa taxable income. The exclusion applies only to qualifying retirement income included in federal taxable income and is subject to Iowa eligibility requirements. Taxpayers who qualify may subtract eligible retirement income when calculating Iowa taxable income on the Iowa Individual Income Tax Return.
Eligibility Criteria
You may claim the Iowa retirement income exclusion if you meet one of the following conditions on the last day of the tax year:
- You are 55 years of age or older, or
- You are disabled, or
- You are the surviving spouse or other qualified survivor of an individual who would have qualified for the exclusion under Iowa law.
Railroad retirement benefits that are included in federal taxable income may be deducted regardless of the recipient's age or disability status.
Types of Income Eligible for Exclusion
The Iowa retirement income exclusion generally applies to qualifying retirement income included in federal taxable income, including:
- Pension income from qualified employer retirement plans
- IRA distributions (including traditional IRAs, SEP IRAs, and SIMPLE IRAs)
- Distributions from qualified retirement plans, including:
- 401(k) plans
- 403(b) plans
- Governmental 457(b) plans
- Keogh (HR-10) plans
- Employee Stock Ownership Plans (ESOPs)
- Qualified annuity distributions
- Roth IRA conversion income included in federal taxable income
- Railroad retirement benefits included in federal taxable income
The exclusion does not generally apply to distributions from nonqualified deferred compensation plans or most nonqualified annuities.
Social Security Benefits
Iowa does not tax Social Security benefits. Any federally taxable Social Security benefits are subtracted when calculating Iowa taxable income according to the Iowa IA 1040 instructions.
Reporting Requirements
Eligible retirement income is reported on Iowa IA 1040 Schedule 1 using the line designated for the IRA, Pension, and Railroad Retirement Income Exclusion. Taxpayers should report only qualifying retirement income that was included in federal taxable income and meets Iowa's eligibility requirements.
When preparing an Iowa return, taxpayers should retain supporting federal forms, such as Form 1099-R, and any other documentation necessary to substantiate the retirement income exclusion if requested by the Iowa Department of Revenue.
Source:
2025 IA 1040
Disclaimer: Always verify details with the official Iowa Department of Revenue forms and instructions. For complex situations, consult a CPA or tax attorney.