Updated October 4, 2026. Quick answer: No. Iowa’s rule says military retirement pay “is exempt from state income tax”, but only to the extent the pay is included in federal taxable income, and Survivor Benefit Plan amounts are exempt too.
How Iowa treats military retired pay
| Item | What the documents say |
|---|---|
| Treatment | Exempt from Iowa income tax, reported on IA 1040 Schedule 1, line 4, column B |
| Limit | Only to the extent the pay is included in federal taxable income |
| Also exempt | Survivor Benefit Plan amounts |
| Other pension exclusion | The military exclusion is in addition to the pension exclusion for people who are disabled, 55 or older, or survivors |
| Cap or age | None printed for the military exclusion |
A $30,000 example
A retiree with $30,000 of military retired pay included in federal taxable income subtracts all $30,000 on Schedule 1, line 4, so none of that pay is left to tax.
Optional adviser-matching service
Plan military retirement income alongside your investments
For U.S. investors with $250,000 or more in investable assets. Want help coordinating retirement income with your investments? Request adviser introductions through WiserAdvisor.
This is investment-adviser matching, not tax-return preparation.
WiserAdvisor is an independent matching service. Free to request, with no obligation to hire. Request up to three adviser introductions; a match is not guaranteed. Submitting its form allows calls, texts and emails from WiserAdvisor and up to three advisers.
Clear Money Guide may earn a referral payment for a qualifying completed form. Advisers pay for introductions; an introduction is not a Clear Money Guide recommendation.
Compare investment advisersOpens on WiserAdvisor’s site in a new tab.
What changes in 2026
No 2026 change is printed in the documents read.
Federal rules
The state’s treatment sits on top of the federal one. The IRS explains the federal side in Publication 3, Armed Forces’ Tax Guide.
Related: whether Iowa taxes pensions, how Iowa taxes retirement income, military retirement pay by state, and the military retirement calculator.
Sources
- 701-302.80(422) Exemption for military retirement pay: https://www.legis.iowa.gov/docs/iac/rule/701.302.80.pdf
- IA 1040 Schedule 1 expanded instructions: https://revenue.iowa.gov/taxes/tax-guidance/individual-income-tax/1040-expanded-instructions/ia-1040-schedule-1
Sources: the primary documents linked above, read on October 4, 2026. General information, not tax advice. Your own facts decide the outcome, and a preparer, the plan administrator or the agency itself is the right place to confirm anything consequential.