Pension/Retirement Income Exclusion:
If you or your spouse receive a pension, an annuity, a self-employed retirement plan, deferred compensation, IRA distribution, or other retirement plan benefits, you may be eligible to exclude from Iowa income tax part or all of the retirement income that is taxable on your federal return. Social Security benefits are not included. The exclusion can be up to $6,000 for individuals who file status 1, 5, or 6 and up to $12,000 for married taxpayers who file status 2, 3, or 4. To take this exclusion you or your spouse must meet one of the following conditions:
- 55 years of age or older on December 31, or
- Disabled, or
- A surviving spouse or a survivor having an insurable interest in an individual who would have qualified for the exclusion on the basis of age or disability.
MARRIED SEPARATE FILERS:
If both spouses have pension income, whether both or only one meet the eligibility requirements, the exclusion of up to $12,000 is prorated between them in the ratio that each spouse's pension relates to the total pension received by both spouses. If only one spouse has pension income, that spouse takes the entire exclusion of up to $12,000. The spouse who has no pension income receives no exclusion, even if that spouse is the one who meets the eligibility requirements.