Questions & Answers
What is the Disability Income Exclusion?
You may exclude from your Iowa tax a portion of the disability pay you received in 2021 if you meet ALL of the following conditions:
- You received disability pay.
- Your federal adjusted gross income (AGI) is below $20,200, or married taxpayers' combined AGI is below $25,400 when both spouses are retired, under 65, and disabled.
- You were not yet 65 when the tax year ended.
- You retired on disability and were totally and permanently disabled when you retired.
- On January 1, 2021, you had not yet reached the age when your employer's retirement program would have required you to retire.
- You took the exclusion in a prior year and you didn't elect 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 time during the year.