Is military retirement pay taxed in Iowa?
By a Navy veteran. Updated October 2026.
No
Iowa: Fully exempt. Federal income tax still applies to retired pay in every state.
What this means for your plan
Iowa exempts military retired pay, so your retired pay is not reduced by state income tax. Other income, such as a second job, a spouse’s wages or business profit, is generally still taxed under Iowa’s normal rules.
VA disability pay is not taxed by the federal government, and most states follow that treatment.
Local taxes in Iowa
School districts add a surtax based on your state tax, so it follows the state treatment.
Questions
Does Iowa tax military retirement pay?
No. Fully exempt.
Is VA disability pay taxed in Iowa?
VA disability compensation is not taxed by the federal government, and most states follow that treatment. Confirm with the Iowa Department of Revenue.
Where do I confirm the rules for Iowa?
Use the Iowa Department of Revenue and the DFAS retired pay tax page. Rules change, so check the current year before you decide where to live.
See it for your family
The free planner puts your retired pay, VA pay and Iowa tax on one 24-month timeline, so you can see the month money gets tight. The States tab in the full version compares all 50 states and DC side by side.
Open the plannerSource and method
This summary comes from the state treatment data in the Runway planner, compiled from published state guides. It is not an official ruling. For the official rule, see the Iowa Department of Revenue and the DFAS retired pay tax page.