What is the Iowa Disability Income Exclusion?

You can exclude a portion of the disability pay you received in 2025 from your Iowa tax if you meet ALL the following conditions:

• You received disability pay.
• Your federal adjusted gross income (AGI) is below $20,200, or if you're married, your combined AGI is below $25,400 when both spouses are retired, under 65, and disabled.
• You were under 65 by the end of the tax year.
• You retired on disability and were totally and permanently disabled when you did.
• On January 1, 2025, you hadn't yet reached the age when your employer's retirement program would have required you to retire.
• You took this exclusion in a prior year and didn't choose to treat disability income as a pension for federal purposes.
• You were married at the end of the tax year and filed a joint federal income tax return for the year unless you didn't live with your spouse at any point during the year.

To find out how much disability to exclude, complete Form IA 2440. Form IA 2440 includes a doctor's statement confirming your total and permanent disability, which must be signed by a physician.

When you file your return, you'll need to mail Form IA 2440, completed and signed by a doctor, to the Iowa Department of Revenue. Not doing this may lead to processing delays.