The amounts of pensions and annuities taxable for Iowa purposes are generally the same as are taxable for federal purposes, with the following exception of military retirement pay.
Military Retirement Pay
Retirement pay for military service in the United States Armed Forces, the Armed Forces Military Reserve, or the National Guard is eligible for exemption from Iowa income tax and is not included on line 9, without regard for age or disability.
The Army, Navy, Air Force, Marine Corps, and Coast Guard make up the Armed Forces. Only military retirement pay received from the Defense Finance and Accounting Service (DFAS), or a similar source, is eligible for the exemption.
Retirement pay received from other sources, including the Office of Personnel Management (OPM), does not qualify for the exemption. In particular, retirement pay resulting from participation in the Civil Service Retirement System (CSRS) or the Federal Employees Retirement System (FERS) does not qualify for the exemption.
For more details, see Iowa Administrative Code rule 701—302.80
State or Local Government Employee
If you are a state or local government employee who retired after December 31, 1994, your taxable pensions and annuities on your Iowa return may be different than on your federal return. In these cases, see the 1099-R issued by Iowa Public Employees Retirement System (IPERS), for the taxable amount.
Railroad Retirement Benefits
Railroad Retirement benefits paid by the Railroad Retirement Board are not taxable on the Iowa return. These benefits should not be included on this line.
Pension / Retirement Income Exclusion
Do not take the pension / retirement exclusion on this line. Qualified taxpayers will take the pension / retirement income exclusion on IA 1040 line 21.
Married Separate Filers:
The taxable portion of pensions and annuities is reported by the spouse who received the income.