Is my military income taxable to Iowa?

According to the Iowa Department of Revenue, Active Duty Military pay is not taxable on the Iowa return. However, the income does need to be reported on the return. 

If you are a resident of Iowa, you can deduct the active duty military pay from the return by performing the following steps in the program:

1. State Section
2. Iowa Resident Return
3. Subtractions From Income
4. Other Adjustments
5. Enter the amount of the active duty military pay
6. The owner of the military pay -  Taxpayer or Spouse
7. Adjustment Type
8. Active Duty Military Pay -  from the drop-down menu
9. Save 

If you are a nonresident of Iowa, Stationed in Iowa you can deduct the active duty military pay completing the following steps in the program:

• State Section
• Nonresident Iowa Return
• Subtractions From Income
• Other Adjustments
• Enter the amount of the active duty military pay
• The owner of the military pay - Taxpayer or Spouse
• Adjustment Type
• Select Active Duty Military Pay - from the drop-down menu
• Save

If one spouse is a resident of Iowa and the other is not, you can file the Iowa return using the Married Filing Joint, Married Filing Separately on a Combined return or Married Filing Separate on a separate return status.

Military Retirement Benefits:

Beginning in 2014, Military Retirement benefits can be excluded from Iowa Individual Income tax returns.  To claim the military retirement deduction, perform the following steps in the program:

1. State Section 
2. Iowa Return
3. Subtractions from Income
4. Military Retirement Pay Included on Your Federal Return
5. Save

Exclusion of Distributions from Retirement Plans by National Guard members and members of military reserve forces of the United States:

If a National Guard or reserve member is called to active state or federal duty and withdraws money from a qualified retirement account, the withdrawal is not taxable to Iowa or subject to any state tax penalty.

If the income is included on line 9 of the Iowa return, deduct it in the program by performing the following steps:

1. State Section
2. Iowa Return
3. Subtractions From Income
4. Other Adjustments
5. Amount - enter funds withdrawn
6. Owner - Taxpayer or Spouse
7. Adjustment Type 
8. Military Exemptions - from drop-down menu
9. Save

Additional Information

• Instructions for the Form IA 1040
• Military Spouse Relief Act
• Iowa Military Tax Information