Dividends from certain Iowa state and municipal securities are exempt from Iowa tax
The following securities are exempt:
Deduct interest received from Federal securities (for example U.S. Savings Bonds, U.S. Treasury Notes).
Do not subtract interest from repurchase agreements of U.S. Government securities.
The following are taxable:
Please see the following link for more information https://tax.iowa.gov/expanded-instructions/taxable-interest-income-0.