Iowa fully exempts military retirement pay from state income tax — placing it among the more veteran-friendly states in the Midwest on that measure. Active duty pay is also tax-free for Iowa residents. On the property tax side, the state offers a complete exemption for 100% service-connected disabled veterans and a flat $4,000 assessed value reduction for qualifying wartime and peacetime veterans across the board. Iowa’s veteran community of approximately 230,000 benefits from a Department of Veterans Affairs that actively administers both state and federal programs and maintains four Iowa Veterans Homes across the state.
Iowa’s primary military installations include the Iowa Army National Guard headquarters at Camp Dodge in Johnston and the 132nd Wing of the Iowa Air National Guard at Des Moines International Airport. The state has a strong tradition of National Guard service with significant deployment history.
USMilitary.org is an independent educational resource, not affiliated with the Iowa Department of Veterans Affairs, the VA, or any government agency. For official benefit information, visit dva.iowa.gov.
- Military retirement pay and SBP annuities are fully exempt from Iowa income tax — active duty pay is also tax-free for Iowa residents
- The Disabled Veteran’s Homestead Tax Credit provides a 100% property tax exemption for 100% service-connected disabled veterans and DIC recipients
- Qualifying wartime and peacetime veterans receive a $4,000 reduction in assessed home value for property tax purposes (Military Service Property Tax Exemption)
- Iowa National Guard members are eligible for up to $9,034 per academic year (2024–2025 rate) through the Iowa National Guard Educational Assistance Program
- Iowa exempts military student loan repayments from state income tax for active and reserve component members on active duty status
- The Iowa Veterans Trust Fund provides emergency financial assistance to Iowa veterans and their families facing hardship
- Income Tax Benefits
- Property Tax Benefits
- Education Benefits
- Employment Benefits
- Iowa Veterans Homes
- Financial Assistance Programs
- Driver’s License and DMV Benefits
- Surviving Spouse and Dependent Benefits
- How to Access Iowa Veteran Benefits
- Frequently Asked Questions
Income Tax Benefits
Military Retirement Pay — Fully Exempt
Iowa fully exempts military retirement pay from state income tax. Federal retirement pay for military service that is included in federal gross income is excluded from Iowa taxable income under Iowa law. This full exemption places Iowa among the roughly half of states that exempt military retirement pay entirely.
Active Duty Pay — Fully Exempt
Active duty military pay received by Iowa residents is fully exempt from Iowa state income tax. This applies to pay earned while on active duty status, regardless of where the service member is stationed.
Survivor Benefit Plans — Fully Exempt
Survivor Benefit Plan (SBP), Reserve Component Survivor Benefit Plan (RCSBP), and Retired Serviceman’s Family Protection Plan (RSFPP) annuities are not taxed in Iowa.
Military Disability Retirement Pay — Exempt
Military disability retirement pay received as a pension, annuity, or similar allowance for personal injury or sickness resulting from active service is not included in Iowa taxable income.
VA Disability Compensation and DIC — Exempt
VA disability compensation and Dependency and Indemnity Compensation (DIC) are federally tax-free and carry no Iowa state tax liability.
Military Student Loan Repayment Exemption
Iowa does not apply state income tax to military student loan repayments included in federal adjusted gross income for active and reserve component service members who are in active duty status. This exemption applies when the loan repayment is included as income for federal purposes — it shields that amount from Iowa taxation.
Reserve Component Active Duty Retirement Plan Withdrawals
National Guard service members and U.S. Army Reservists who are called to federal or state active duty may exclude certain retirement plan distributions from Iowa income tax during the period of activation, providing additional financial relief during mobilization.
Property Tax Benefits
Disabled Veteran’s Homestead Tax Credit — 100% Exemption
Iowa’s Disabled Veteran’s Homestead Tax Credit provides a complete exemption from property taxes for qualifying veterans. This is the state’s most significant property tax benefit. To qualify:
- 100% service-connected permanent disability rating from the VA, or
- Dependency and Indemnity Compensation (DIC) recipient (surviving spouse of a veteran who died from service-connected causes)
- Iowa resident, primary residence
- Honorably discharged
The credit provides a total exemption — not just a reduction — eliminating the entire property tax bill on the primary residence for qualifying veterans and DIC recipients. Contact your county assessor for the application and current filing deadlines.
Military Service Property Tax Exemption — $4,000 Reduction
The Military Service Property Tax Exemption reduces the assessed value of a qualifying veteran’s primary home by $4,000 for property tax purposes. This broad exemption is available to veterans who served on active duty during a wartime period, or who served for a minimum of 18 months during peacetime. To qualify:
- Honorable discharge from active duty
- Wartime service during a designated period, OR peacetime service of at least 18 months
- Iowa resident, primary residence
The $4,000 reduction in assessed value saves approximately $50–$100 per year depending on local mill rates — not a dramatic savings in dollar terms, but broadly available and applicable to veterans at all disability levels.
Education Benefits
Iowa National Guard Educational Assistance Program — Up to $9,034/Year
Iowa National Guard members in good standing are eligible for the Iowa National Guard Educational Assistance Program, which provides up to $9,034 per academic year (2024–2025 rate) toward tuition and fees at Iowa institutions. Members who are mobilized or deployed receive a tuition refund for any coursework interrupted by their activation.
Iowa GI Bill Supplemental Assistance
Iowa provides supplemental assistance to veterans using the federal Post-9/11 GI Bill. Iowa state colleges and universities participate in the Yellow Ribbon Program, and the Iowa College Student Aid Commission administers additional state-level aid programs for veterans. Contact the Iowa Department of Education (Iowa’s State Approving Agency for GI Bill programs) for current benefit details.
Iowa Veteran Fee Scholarship
Iowa community colleges and Board of Regents institutions offer reduced tuition or fee waivers for eligible veterans. Specific programs vary by institution — contact individual schools’ veterans services offices for current scholarship and fee reduction options.
Employment Benefits
State Employment Preference
Iowa provides veteran preference in competitive state government employment. Honorably discharged veterans receive preference points in examination scores and hiring decisions. Disabled veterans receive additional preference. The preference also applies to promotional opportunities within state employment.
Iowa Department of Labor — Priority of Service
Iowa’s workforce development system provides Priority of Service for veterans, which means veterans receive preferential access to employment programs, job training, and career services at Iowa WorkForce Development Centers. Veterans with service-connected disabilities receive the highest priority tier.
Iowa Veterans Homes
Iowa operates four state veterans homes providing long-term care for eligible veterans:
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- Iowa Veterans Home, Marshalltown — the largest facility, providing nursing, residential, and domiciliary care
- Iowa Veterans Home, Dack
- Iowa Veterans Home, Clarence
- Iowa Veterans Home, Bettendorf
Eligibility is based on veteran status, Iowa residency, and need for the level of care provided. Iowa Veterans Homes are nationally recognized for their quality of care. Contact the Iowa Department of Veterans Affairs for current admission criteria and availability.
Iowa also maintains the Iowa Veterans Cemetery in Van Meter, providing burial services for eligible Iowa veterans and their dependents at no cost to the family for the veteran’s internment.
Financial Assistance Programs
Iowa Veterans Trust Fund
The Iowa Veterans Trust Fund provides emergency financial assistance to Iowa veterans and their families facing unexpected hardship. The fund can assist with basic necessities, utility bills, rent, and other emergency needs. Applications are processed through county Veterans Affairs offices, which can also connect veterans with other state and nonprofit resources.
Iowa Military Homeownership Assistance Program
Iowa offers homeownership assistance to qualifying service members and veterans through the Iowa Finance Authority. The program provides down payment assistance and favorable loan terms for home purchases. Contact the Iowa Finance Authority for current program availability and eligibility requirements.
Driver’s License and DMV Benefits
Iowa allows honorably discharged veterans to request the “Veteran” designation on their driver’s license or state-issued identification card. This designation is available at no additional charge upon presentation of discharge documentation (DD-214). Iowa also offers veteran-specific license plates — contact the Iowa Department of Transportation for current plate options and fees.
Surviving Spouse and Dependent Benefits
Surviving spouses of veterans who died from service-connected causes may qualify for the Disabled Veteran’s Homestead Tax Credit as DIC recipients. SBP and RCSBP annuities are fully exempt from Iowa income tax. Surviving spouses of veterans who were receiving the Military Service Property Tax Exemption may continue to receive that benefit in many circumstances — verify with your county assessor.
How to Access Iowa Veteran Benefits
The Iowa Department of Veterans Affairs administers state benefits and maintains county Veterans Affairs offices throughout the state. Iowa Veterans Service Officers provide free assistance with federal and state benefit applications.
- Iowa Department of Veterans Affairs: dva.iowa.gov | Phone: 1-800-838-4692
- Disabled Veteran’s Homestead Tax Credit: Apply through your county assessor’s office
- Military Service Property Tax Exemption: Apply through your county assessor’s office
- National Guard educational assistance: Contact your unit’s education officer or the Iowa National Guard Education Office
- Veterans Trust Fund emergency assistance: Contact your county Veterans Affairs office
- Veterans homes: ivh.iowa.gov
This article is provided by USMilitary.org, an independent educational resource. We are not affiliated with the Iowa Department of Veterans Affairs, the VA, or any government agency. Benefits are subject to change — verify current program details at dva.iowa.gov.
Frequently Asked Questions
No. Iowa fully exempts military retirement pay from state income tax. Active duty pay is also fully exempt. Survivor Benefit Plan annuities are likewise not taxed in Iowa.
Veterans with a 100% permanent service-connected disability rating, and surviving spouses receiving DIC, qualify for a complete property tax exemption on their primary residence — not just a reduction, but full elimination of the property tax bill. Apply through your county assessor’s office.
Yes. Iowa National Guard members in good standing are eligible for up to $9,034 per academic year through the Iowa National Guard Educational Assistance Program. Members called to active duty during their enrollment can receive a tuition refund for interrupted coursework.
The Iowa Veterans Trust Fund provides emergency financial assistance for Iowa veterans facing unexpected hardship — covering basic necessities, utilities, rent, and other emergency needs. Applications are processed through county Veterans Affairs offices. Contact the Iowa Department of Veterans Affairs or your county office for assistance.