Retirement income exempt
How Iowa taxes retirement income
Since 2023, Iowa has excluded retirement income from state tax for anyone 55 or older, anyone who is disabled, and surviving spouses and certain survivors of someone who would have qualified. Social Security is excluded at any age. Iowa’s income tax is a flat 3.8%, but most retirees owe nothing on their retirement income.
The exclusion is broad. It covers government and private pensions, defined contribution plans such as 401(k), 403(b) and 457(b) accounts, traditional and Roth IRAs, SEP and SIMPLE IRAs, and even Roth conversion income. It applies to IPERS and to pensions from any other state.
Two exceptions are worth knowing. Retirees under 55 who are not disabled pay tax on pension and account withdrawals. And Iowa does not treat nonqualified deferred compensation or nonqualified annuities as retirement income, so those are taxed.
Questions
Does Iowa tax IPERS pensions?
Not for retirees who are 55 or older, disabled, or surviving spouses. They exclude IPERS and other pensions in full.
I retired at 53. Is my pension taxed in Iowa?
Yes, until the tax year you turn 55, unless you are disabled. From then on it is excluded.
Does Iowa tax Social Security?
No. Social Security is excluded from Iowa income tax at any age.