Qualifications for Exemption from Tax
If you qualify for the low income exemption as explained below, enter the words “low income exemption” in the area to the left of your net income figure on line 26. Enter zero on line 55 and complete the remainder of the return.
If you do not owe tax:
Even if you owe no tax, you must file an income tax return to receive a refund of any refundable Iowa tax credits or any Iowa tax withheld.
If you are exempt from tax:
If you are exempt from tax, you may want to change your IA W-4 (pdf) form with your employer to eliminate state withholding from your wages.
Income included to determine exemption:
The following income must be included when determining if you are eligible for the $9,000 exemption or the $13,500 exemption ($24,000 or $32,000 if 65 or older on 12/31/18).
- The incomes of both spouses must be combined to determine if you meet this exemption from tax.
- The amount of any pension exclusion that is taken on line 21 of the IA 1040.
- Any reportable Social Security benefits from step 4 of the IA 1040.
- Any amount of lump-sum distribution separately taxed on federal form 4972.
Note: Carryover of Net Operating Loss claimed on the IA1040 must be added back to net income line 26 to determine who must file.
Filing Status 1, Single:
If you are using filing status 1 (single), you are exempt from Iowa tax if you meet either of the following conditions:
- Your net income from all sources, line 26, is $9,000 or less and you are not claimed as a dependent on another person's Iowa return ($24,000 if you are 65 or older on 12/31/18).
- Your net income from all sources, line 26, is less than $5,000 and you are claimed as a dependent on another person's Iowa return.
All Other Filing Statuses:
If you are filing married filing jointly, married filing separately on a combined return, head of household, or qualifying widow(er), you are exempt from Iowa tax if you meet the following condition:
- Your net income from all sources, line 26, is $13,500 or less and you are not claimed as a dependent on another person's Iowa return ($32,000 if you or your spouse is 65 or older on 12/31/18).
Nonresidents and Part-Year Residents
In addition to the exemption provisions above, if you were a nonresident or part-year resident and had net income from Iowa sources of less than $1,000 (see note below) you are exempt from Iowa tax. To review instructions for "Iowa-source income," see the instructions for lines 1-26 of the IA 126. If you had Iowa tax withheld and are requesting a refund, or choose to file an Iowa return even though you aren't required to do so, you must complete the entire IA 1040 and the entire IA 126.
NOTE: If you were a nonresident or part-year resident and subject to Iowa lump-sum tax or Iowa alternative minimum tax (even if Iowa-source income is less than $1,000), you are required to file an Iowa return reporting the Iowa lump-sum and/or Iowa alternative minimum tax even if you have no regular Iowa income tax liability.
Married Separate Filers:
Married taxpayers filing married filing separately on a combined return or married filing separate returns must use the combined income of both spouses in determining eligibility for exemption from tax.
If either spouse has a net operating loss that is carried back or forward, then the other spouse cannot use the low income exemption. If the spouse with the net operating loss chooses not to carry the loss back or forward, then the other can claim the low income exemption. A statement must be included with the return saying that the spouse with the net operating loss will not carry it back or forward.