When filing your Iowa individual income tax return (Form IA 1040), taxpayers must report certain Iowa-specific additions and subtractions to federal income. These modifications are reported on IA 1040 Schedule 1 (Iowa Modifications to Federal Income) and adjust federal income to determine Iowa taxable income.
Column A should be used to report additions to federal taxable income and Column B should be used to report subtractions from federal taxable income.
Key Iowa Adjustments
Column A – Additions to Federal Taxable Income
- Interest: Enter interest from state and municipal securities, to the extent not already included in federal taxable interest on the IA 1040, line 2,, unless specifically exempt from Iowa tax (such as certain Iowa state and municipal securities)
Column B – Subtractions from Federal Taxable Income
- Interest: Enter interest received from federal securities (for example, U.S. Savings Bonds, U.S. Treasury Notes), to the extent included on the IA 1040, line 2.
- Military Retirement Income: Enter the amount of military retirement benefits received to the extent included in federal taxable income.
- Social Security Benefits: Enter the amount of social security benefits included in federal taxable income from federal form 1040, line 6b. Iowa does not tax Social Security benefits.
- College Savings Iowa or Iowa Advisor 529 Plan Contributions: Eligible contributions to a College Savings Iowa or Iowa Advisor 529 Education Savings Plan may qualify for an Iowa income subtraction, subject to the annual limitation established by Iowa law. Report the allowable subtraction on IA 1040 Schedule 1.
- Iowa Capital Gain Deduction: Taxpayers who qualify for the Iowa capital gain deduction must complete Form IA 100 or Form IA 100D, as applicable. The allowable deduction is then reported on IA 1040 Schedule 1 in accordance with the Iowa Department of Revenue instructions.
- Iowa Net Operating Loss (NOL) Deduction: Taxpayers claiming a pre-2023 Iowa Net Operating Loss (NOL) carryforward may be required to complete Form IA 124 to determine the allowable deduction. The allowable deduction is then reported on IA 1040 Schedule 1, if applicable. Iowa conforms to the federal NOL rules beginning with tax year 2023.
Note: This is not a comprehensive list. To see all deductions, review Schedule 1 in the IA 1040 instructions
Important Notes
- Federal itemized deductions and Iowa Schedule 1 modifications are separate provisions and are reported differently on the Iowa return.
- Not all taxpayers will have Iowa income modifications to report.
- Taxpayers should review the IA 1040 Schedule 1 Instructions, which are the primary authority for Iowa additions and subtractions, along with the Form IA 1040 Instructions, to determine which deductions and modifications apply.
Source:
Form IA 1040
IA 1040 Schedule 1 Instructions
Form IA100
Form IA 100D
Form IA 124
Disclaimer: Always verify details with the most current Federal and State Department of Revenue Forms and Instructions. Tax laws and forms may change annually. For complex situations, consult a CPA or tax attorney.