How to apply for Iowa retirement income exclusion (no state income tax on pensions, IRAs, and 401(k)s at 55+)

Who it's for

Since tax year 2023, Iowa does not tax retirement income for people who are 55 or older on December 31 of the tax year, or who are disabled. This covers pensions (including IPERS), traditional and Roth IRAs, 401(k), 403(b) and 457 plans, SEP and SIMPLE plans, and Keogh plans. A surviving spouse, or a son, daughter, mother, or father with an insurable interest, can also exclude retirement income from someone who qualified. For a married couple, each spouse must qualify for their own retirement income to be excluded. Social Security benefits are also subtracted on the Iowa return (IA 1040 Schedule 1). Claim the exclusion on IA 1040 Schedule 1, line 7. If tax is being withheld from a qualifying pension, ask the plan to stop withholding Iowa tax (Form IA W-4P).

What you'll need

• Form 1099-R for each pension, IRA, or retirement plan payment
• Your Iowa income tax return (IA 1040 with Schedule 1)

Where to apply

Step by step

1. Gather Form 1099-R for each pension, IRA, or retirement plan payment.
2. Complete your Iowa income tax return, including IA 1040 with Schedule 1.
3. Claim the retirement income exclusion on IA 1040 Schedule 1, line 7.
4. Apply online when you file your Iowa return.
5. If Iowa tax is being withheld from a qualifying pension, ask the plan to stop withholding Iowa tax using Form IA W-4P.
6. Check your return carefully. Nonqualified annuities and nonqualified deferred compensation plans do not qualify, and if only one spouse is age 55 or older or disabled, only that spouse's retirement income can be excluded.

What to expect: After you submit your Iowa return online, the Iowa Department of Revenue reviews it and makes the final decision. The tax savings depend on how much retirement income you have. Processing times can vary, so ask the agency if you need an estimate. This exclusion is claimed each year on your Iowa return.

Renewals

annual (claimed on each year's Iowa return)