Iowa allows for you to exclude part or all of your retirement income from your state return. Certain qualifications must be met for your filing status. If you file as Single, Head of Household or Qualifying Widow(er), you can exclude up to $6,000. If you are a married filer, you can exclude up to $12,000 of retirement income.
To take this exclusion the recipient must be:
- Age 55 or older at the end of the tax year,
- Disabled, OR
- A surviving spouse of an individual that would have qualified for the exclusion based on age and disability.
If you file as Married Filing Separate and both filers meet the requirements, the exclusion of up to $12,000 will be prorated. If only one spouse receives the pension, they can take the entire exclusion amount of $12,000.
For Tax Year 2023: The retirement income exclusion has been increased to include all qualifying pension and retirement income for qualifying taxpayers.
How to enter?
To make this manual entry, go to:
- State Section
- Subtractions From Income
- Pension and Retirement Income Exclusion
See also Is my military pension/retirement income taxable to Iowa?