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Line: 24
Step: 6
Step Subject: Refundable Credits and Payments
Instruction Year: 2025
Child and Dependent Care Credit OR
Early Childhood Development Tax Credit
Only taxpayers with Iowa taxable income of less than $90,000 are eligible to take one of these refundable credits. If you are married filing jointly, your Iowa taxable income and the Iowa taxable income of your spouse must be combined to determine if you qualify.
If you are choosing the Child and Dependent Care Credit, use the following worksheet and percentage table to calculate the credit. The percentages are based on your Iowa taxable income on line 4. You must include a copy of your completed federal form 2441. This credit may only be claimed for expenses actually paid by the taxpayer.
Child and Dependent Care Credit Worksheet Child and Dependent Care Credit Worksheet 1. Enter the amount from federal form 2441, line 9c 1.________ 2. If IA 1040, line 4 is: Less than $10,000 enter 75% $10,000 - $19,999 enter 65% $20,000 - $24,999 enter 55% $25,000 - $34,999 enter 50% $35,000 - $39,999 enter 40% $40,000 - $89,999 enter 30% $90,000 and over: not eligible for credit (0%) Enter the appropriate percent here. 2.________% 3. Multiply line 1 by percentage on line 2. Enter the result here and on the IA 1040, line 24. 3.________
The Child and Dependent Care Credit must be adjusted using the following steps:
Multiply the Iowa income percentage reported on the IA 126, line 29 by the amount of credit calculated in the worksheet, line 3.
Enter this amount on the IA 1040, line 24.
Generally, you may not take this credit if your filing status is married filing separately. See IRS Publication 503 for more information.
If you are choosing the Early Childhood Development Credit, you may take the credit equal to 25% of the first $1,000 of qualifying expenses paid in 2025 for each dependent from the ages of three through five.
Services provided by a preschool, as defined in Iowa Code section 237A.1
Books that improve child development, such as textbooks, music and art books, teacher's editions, and reading books
Instructional materials required to be used in a lesson activity, such as paper, notebooks, pencils, and art supplies
Lesson plans and curricula
Child development and educational activities outside the home, such as drama, art, music and museum activities, and the entrance fees for such activities
Food, lodging, or membership fees relating to child development and educational activities outside the home
Services, materials, or activities for the teaching of religious tenets, doctrines, or worship, if the purpose of these expenses is to instill those tenets, doctrines, or worship
The Early Childhood Development Credit must be adjusted using the following steps
Multiply the Iowa income percentage reported on the IA 126, line 29 by the amount of the credit.
Enter this amount on the IA 1040, line 24.
This credit must be taken by the spouse claiming the dependent. The $90,000 income limitation only applies to the income of the taxpayer and does not include their spouse’s income.
Go to Line 23: Fuel Tax Credit
Go to Line 25: Iowa Earned Income Tax Credit
Step: 3
Step Subject: Exemption Credits
Instruction Year: 2025
a. Personal Credit
If you are filing single (status 1), married filing separately (status 3) or qualifying surviving spouse (status 5), enter 1 in the Personal Credit space.
If you are filing married filing jointly (status 2) or head of household (status 4), you are eligible for an extra credit and should enter 2 in the Personal Credit space.
Add the number of personal credits and multiply by $40. Enter this amount on the line.
Note to dependents filing their own returns:
You may claim a $40 personal exemption credit even if you are claimed as a dependent on another person's Iowa return.
b. Additional Personal Credit: 65 or older or blind
If you were 65 or older on or before January 1, 2026, you may take an additional personal credit.
If your spouse was 65 or older on or before January 1, 2026, and you are filing a joint return (status 2), you may take an additional personal credit for your spouse.
If you were blind on December 31, 2025, you may take an additional personal credit.
If your spouse was blind on December 31, 2025, and you are filing a joint return (status 2), you may take an additional personal credit for your spouse.
Add the number of credits for 65 or older and blind and multiply by $20. Enter this amount on the line.
c. Dependents: Consult IRS Publication 17 to learn who qualifies as a dependent.
Enter the number of dependent children and other dependents you are claiming for federal income tax purposes. Add the number of dependent credits and multiply by $40. Enter this amount on the line.
Federal tax law determines whether or not a person is a dependent. Consult IRS Publication 17 to learn who qualifies as a dependent. The IRS has guidelines that also determine which parent/guardian can claim a dependent when separate returns are filed (such as in the case of divorced parents). The Iowa tax law follows federal guidelines.
d. Total
Add the dollar amounts and enter on Step 3, line d and on line 8.
Dependent(s)
Enter the first name, last name, social security number, and relationship to you for each dependent claimed on the tax return. If you have more than four dependents, check the box and include a separate page listing any additional dependents with this return.
You must report the same dependents you claimed on your federal income tax return.
Step Subject: Schedule 1
Instruction Year: 2025
Schedule 1 (located on page 5 of the IA 1040) is used to report Iowa modifications to federal taxable income. Amounts should only be reported if there is a difference between the federal and Iowa reportable amounts. Column A should be used to report additions to federal taxable income and Column B should be used to report subtractions from federal taxable income. Report all amounts as a positive number.
NOTE : The Schedule 1 should not be used to solely adjust for income that was sourced from or taxed by another state, country, municipality or other jurisdiction. These adjustments and reconciliations are made using IA 126 (nonresidents or part-year residents to Iowa) or IA 130 (residents and certain part-year residents to Iowa).
However, interest from certain Iowa state and municipal securities is exempt from Iowa tax and should not be included on this line. For more information, see Iowa Administrative Code rules 701—302.2 and 701—302.3.
The following securities are exempt:
Aviation Authority Bonds, Iowa Code section 330A.16
Beginning Farmer Loan Program Bonds, Iowa Code section 175.17(10)
Community College Bond Program Bonds, Iowa Code section 260C.71(6)
Community College Residence Halls and Dormitories Bonds, Iowa Code section 260C.61
County Health Center Bonds, Iowa Code section 331.441(2)"C"(7)
E911 Emergency Telephone Service Program Bonds, Iowa Code section 34A.20(6)
Interstate Bridges Bonds, Iowa Code section 313A.36
Iowa Board of Regents Bonds for buildings and facilities, Iowa Code sections 262.41, 262.51, 262.60, and 262A.8
Iowa Higher Education Loan Authority, Iowa Code section 261A.27
Iowa Municipality Urban Renewal Bonds, Iowa Code section 403.9(2)
Iowa Rural Water District Revenue Bonds and notes, Iowa Code section 357A.15
Low Income Housing Bonds, Iowa Code section 403A.12
Prison Infrastructure Revenue Bonds, Iowa Code section 16.177(8)
Regents Institutions Medical and Hospital Buildings at University of Iowa Bonds, Iowa Code section 263A.6
Soil Conservation Districts Revenue Bonds, Iowa Code section 161A.22
Quad Cities Interstate Metropolitan Authority Bonds, Iowa Code section 28A.24
Sewage Treatment Works Revenue Bonds, Iowa Code section 16.131(6)
Underground Storage Tank Fund Revenue Bonds, Iowa Code section 455G.6(14)
Vision Iowa Program, Iowa Code section 12.71
Iowa Utilities Board and Consumer Advocate Building Bonds, Iowa Code section 12.91(9)
School Infrastructure Program Bonds, Iowa Code section 12.81(8)
Appropriation Bonds, Iowa Code section 12.87(8)
Natural Hazard Mitigation Financing Bonds, Iowa Code section 16.232
The following list contains widely held United States Government obligations, but is not intended to be all-inclusive.
The following are exempt and should be included in Column B to the extent they are included in federal taxable income:
a. United States Government obligations: United States Treasury - Principal and interest from bills, bonds, and notes issued by the United States Treasury exempt under 31 USC section 3124(a). Series E, EE, F, G, H and I bonds United States Treasury bills U.S. Government certificates U.S. Government bonds U.S. Government notes
b. Territorial obligations: Guam - Principal and interest from bonds issued by the Government of Guam (48 USCS section 1423[a]). Puerto Rico - Principal and interest from bonds issued by the Government of Puerto Rico (48 USCS section 745). Virgin Islands - Principal and interest from bonds issued by the Government of the Virgin Islands (48 USCS section 1403). Northern Mariana Islands - Principal and interest from bonds issued by the Government of the Northern Mariana Islands (48 USCS section 1681(c)).
c. Federal agency obligations: Commodity Credit Corporation - Principal and interest from bonds, notes, debentures, and other similar obligations issued by the Commodity Credit Corporation (15 USCS section 713a–5). Banks for Cooperatives - Principal and interest from notes, debentures, and other obligations issued by Banks for Cooperatives (12 USCS section 2134). Farm Credit Banks - Principal and interest from systemwide bonds, notes, debentures, and other obligations issued jointly and severally by Banks of the Federal Farm Credit System (12 USCS section 2023). Federal Land Bank Association - Principal and interest from bonds, notes, debentures, and other obligations issued by the Federal Land Bank Association (12 USCS section 2098). Financial Assistance Corporation - Principal and interest from notes, bonds, debentures, and other obligations issued by the Financial Assistance Corporation (12 USCS section 2278b–10[b]). Production Credit Association - Principal and interest from notes, debentures, and other obligations issued by the Production Credit Association (12 USCS section 2077). Federal Deposit Insurance Corporation (FDIC) Principal and interest from notes, bonds, debentures, and other such obligations issued by the Federal Deposit Insurance Corporation (12 USCS section 1825). Federal Financing Bank - Interest from obligations issued by the Federal Financing Bank. Considered to be United States Government obligations (12 USCS section 2288, 31 USCS section 3124[a]). Federal Home Loan Bank - Principal and interest from notes, bonds, debentures, and other such obligations issued by any Federal Home Loan Bank and consolidated Federal Home Loan Bank bonds and debentures (12 USCS section 1433). Federal Financing Corporation - Principal and interest from notes, bonds, debentures, and other such obligations issued by the Federal Financing Corporation (12 USCS section 2288(b)). Financing Corporation (FICO) - Principal and interest from any obligation of the Financing Corporation (12 USCS Sections 1441[e][7] and 1433). General Services Administration (GSA) - Principal and interest from General Services Administration participation certificates. Considered to be United States Government obligations (31 USCS section 3124[a]). Housing and Urban Development (HUD). Principal and interest from War Housing Insurance debentures (12 USCS section 1739[d]). * Principal and interest from Rental Housing Insurance debentures (12 USCS section 1747g[g]). * Principal and interest from Armed Services Mortgage Insurance debentures (12 USCS section 1748b[f]) * Principal and interest from National Defense Housing Insurance debentures (12 USCS section 1750c[d]). * Principal and interest from Mutual Mortgage Insurance Fund debentures (12 USCS section 1710[d]). National Credit Union Administration Central Liquidity Facility - Income from notes, bonds, debentures, and other obligations issued on behalf of the National Credit Union Administration Central Liquidity Facility (12 USCS section 1795k[b]). Resolution Funding Corporation - Principal and interest from obligations issued by the Resolution Funding Corporation (12 USCS Sections 1441[f][7] and 1433). Student Loan Marketing Association (Sallie Mae) - Principal and interest from obligations issued by the Student Loan Marketing Association. Considered to be United States Government obligations (20 USCS section 1087–2[1], 31 USCS section 3124[a]). Tennessee Valley Authority - Principal and interest from bonds issued by the Tennessee Valley Authority (16 USCS section 831n–4[d]). United States Postal Service - Principal and interest from obligations issued by the United States Postal Service (39 USCS section 2005[d][4]). Certificates on Government Receipts.
Federal Agency Obligations:
Building and Loan Associations
Credit Unions, federal or state
Export-Import Bank of the United States
Federal Agricultural Mortgage Corporation (Farmer Mac)
Federal Home Loan Mortgage Corporation (Freddie Mac) Securities
Federal Housing Administration
Federal income tax refunds, interest
Federal National Mortgage Association
Federal National Mortgage Association (Fannie Mae) Securities
Government National Mortgage Association (Ginnie Mae) Securities
Merchant Marine (Maritime Administration)
Money Market Certificates
Mortgage Participation Certificates
Savings and Loan Associations, federal or state
Small Business Administration
Obligations of International Institutions:
Asian Development Bank
Inter-American Development Bank
International Bank for Reconstruction and Development (World Bank)
Other Obligations:
Washington D.C. Metro Area Transit Authority
Married Separate Filers: Divide interest income based on ownership of the account or certificate.
Jointly held: Divide equally between spouses.
Held in the name of only one spouse: Allocate interest wholly to that spouse.
Column A: Include all dividends from mutual funds, investment trusts, or regulated investment companies investing in state and municipal bonds.
Column B: Include that portion of any net dividends from a mutual fund, investment trust, or regulated investment company that is attributable to direct federal securities. You cannot take this deduction unless you are provided a statement from the fund giving the percentage of net dividends attributable to direct federal securities. If a return is filed on paper, a copy of the statement must be included with the return to take this deduction.
Interest income from repurchase agreements involving federal securities cannot be deducted.
Married Separate Filers: Divide dividends based on registered ownership of stock.
Jointly held: Divide equally.
Held in the name of only one spouse: Allocate dividends wholly to that spouse.
Report the amount of Iowa modifications from IA 1065 Schedule K-1, Part II, line 19(a), IA 1120S Schedule K-1, Part II, line 17(a), and IA 1041 Schedule K-1, Part II, line 9.
Enter in column B the amount of military retirement benefits received to the extent included in federal taxable income.
Enter in column B the amount of active duty military pay. Members of the armed forces, armed forces military reserve, or the national guard in an active duty status can exclude pay received from the federal government for military service performed, to the extent it was included in IA 1040, line 2, federal taxable income, regardless if the taxpayer was an Iowa resident or not.
For more information, see Iowa Tax Responsibilities of Servicemembers and Their Spouses .
If you or your spouse receive federal taxable income from a governmental or other pension or retirement plan you may be eligible to exclude that amount from your Iowa income.
To take this exclusion, the income recipient must meet one of the following conditions:
55 years of age or older on December 31, 2025, or
Disabled, or
A surviving spouse or a survivor having an insurable interest in an individual who would have qualified for the exclusion in 2025 on the basis of age or disability.
A surviving spouse who receives amounts from a deceased spouse’s pension, regardless if the deceased spouse was 55 years of age or older or disabled, if the pension was from employment in a protection occupation, or as a sheriff, deputy sheriff, firefighter, or police officer.
Examples of distributions from the following plans that qualify for the exclusion include:
Distributions from individual retirement plans (IRA) authorized under section 408 of the Internal Revenue Code (IRC)
Distributions from a simplified employee pension (SEP) plan;
Distributions from a savings incentive match plan for employees (SIMPLE) retirement plan;
Distributions from a Keogh plan;
Distributions from qualified pension plans as described in Treasury Regulation section 1.401-1(b)(1)(i), including IPERS;
Roth conversion income;
Distributions from qualified deferred compensation plans governed by the Employee Retirement Income Securities Act (ERISA) including a 401(k), 403(b), and 457(b) plan;
Annuity distributions pursuant to IRC section 402(a).
Distributions from an Employee Stock Ownership Plan (ESOP) as defined in section 4975(e)(7) of the IRC
Include in this deduction the total amount of railroad retirement income that is included in federal taxable income regardless of age or disability status.
For tax years beginning on or after January 1, 2024, a surviving spouse may exclude amounts received from a deceased spouse’s pension, regardless if the deceased spouse was 55 years of age or older or disabled, if the pension was from employment in a protection occupation, or as a sheriff, deputy sheriff, firefighter, or police officer. Pension income must come from a retirement plan provided for under one of the following Iowa Code sections:
97A - Public Safety Peace Officers Retirement, Accident, and Disability System
97B.49B - Protection Occupation - Iowa Employees Retirement System
97B.49C - Sheriff and Deputy Sheriffs Iowa Employees Retirement System
410 - Firefighter and Police Officers - Retirement and Disability
411 - Retirement System for Police and Firefighters
Note: Distributions from the following plans are not eligible for the retirement income exclusion:
(1) Nonqualified deferred compensation plans (2) Nonqualified annuities - Most nonqualified annuity distributions will report a code of “D” in box 7 on federal form 1099-R
For more information, see Iowa Administrative Code rule 701—302.47 and our Retirement Income Tax Guidance .
Enter in column B the amount of any railroad unemployment income from the Railroad Retirement Board.
Enter the expense and depreciation adjustment from the IA 4562A and the IA 4562B. Include the IA 4562A and the IA 4562B with your return. Column A should be used to report additions to federal taxable income and Column B should be used to report subtractions from federal taxable income. Report all amounts as a positive number.
Enter in column A your federal net operating loss carried forward from a year prior to January 1, 2023. Include the IA 124 with your return. Report all amounts as a positive number.
Enter other income or adjustments not reported on lines 1-10 which have not already been included on IA 1040, line 2. Write an explanation of the type of adjustment on a separate form or schedule. Column A should be used to report additions to federal total income and Column B should be used to report subtractions from federal total income. Report all amounts as a positive number. Examples of income or adjustments to be reported include:
Report all babysitting income not already reported on Federal Schedule C, line 1. This modification can only be claimed on Column A.
Amounts received from the cancellation of a participation agreement or other non-qualifying withdrawal to the extent the amount was previously deducted on the IA 1040. Qualifying withdrawals may include up to $10,000 ($20,000 for tax years beginning after December 31, 2025) per beneficiary per year for tuition expenses of attending an accredited elementary or secondary (K-12) school in Iowa or an out-of-state elementary or secondary school that educates a beneficiary who is a child “requiring special education” under Iowa Code section 256B.2. The $10,000 per-beneficiary cap applies even if the beneficiary receives money from multiple Iowa 529 or Iowa Advisor 529 Plan accounts. The $10,000 annual cap does not apply to withdrawals used to pay qualified education expenses related to higher education. Qualifying withdrawals include withdrawals for certain expenses related to participation in an apprenticeship program and withdrawals, up to $10,000, used to pay either principal or interest on a qualified education loan on behalf of a beneficiary or a beneficiary’s sibling. If you withdrew funds from a 529 Plan to pay qualified higher education expenses and you received a refund of those funds, the refund amount is not considered a qualifying withdrawal if it is recontributed to the same Iowa 529 Plan account from which it was withdrawn within sixty (60) of the date of the refund. To be a qualifying withdrawal, the recontribution amount cannot exceed the amount of the refund from the qualifying higher education institution.
Taxpayers who make a qualifying transfer from a 529 plan to a Roth IRA on or after January 1, 2024 are no longer required to add-back the amount previously deducted when the provisions of IRC § 529(c)(3)(E) are met.
This modification can only be claimed on Column A. For the deduction related to Iowa 529 and Iowa Advisor 529 Plans, see Schedule 1, Line 14.
Non-qualifying withdrawals from your Iowa First-time Homebuyer Savings Account that were previously deducted on the IA 1040 must be added back on this line, along with any applicable penalty. Non-qualified withdrawals required to be added back here are assessed a penalty equal to 10% of the amount of the withdrawal, unless the non-qualifying withdrawal was made by reason of the death of the account holder or certain other circumstances. If an account holder makes a non-qualifying withdrawal, they are not permitted to claim a deduction for any future contribution to any First-time Homebuyer Savings Account. All withdrawals (qualifying and non-qualifying) from your First-time Homebuyer Savings Account must be reported to the Department on the Iowa First-time Homebuyer Savings Account Withdrawal Form within 90 days of the date of withdrawal.
This modification can only be claimed on Column A. For the deduction related to First-time home buyer savings accounts, see Schedule 1, Line 19, code j.
The Net Premium Tax Credit from the 2024 federal 1040, Schedule 3, line 9 will be reported as Other Income on this line to the extent the insurance contributions were deducted on the Iowa return in a prior tax year. If the deduction is taken on the IA 1040 Schedule A (for tax years prior to 2023), then the federal tax guidance should be followed when addressing the complications due to the impact of the Federal Excess Advance Premium Tax Credit repayment and the Net Premium Tax Credit.
However, if the deduction is taken on IA 1040, line 18 (for tax years prior to 2023), then the IA 1040, Schedule 1, Line 11, must reflect the impact of the Federal Excess Advance Premium Tax Credit repayment and the Net Premium Tax Credit. The Iowa expanded instructions for this line and IA 1040, Schedule 1, line 15 set forth the Department’s guidance for the correct reporting of these amounts.
This modification can only be claimed on Column A.
Report amounts received from cancellation of accounts or other non-qualifying withdrawals to the extent the amount was previously deducted on the IA 1040. This modification can only be claimed on Column A. For the deduction related to Iowa ABLE Savings Plans, see Schedule 1, line 19, code ii.
See IA 101 Nonconformity Adjustments Schedule. Include IA 101 with your return.
Report any interest expenses adjustment. Include IA 163 with your return.
Report to the extent included in federal taxable income, up to $1,000, the amount of:
Premium pay received by a certified peace officer who was designated by the governor of the State of Iowa as an eligible worker.
Premium pay received by a correctional officer or medical staff member at a correctional facility who was designated by the governor of the State of Iowa as an eligible worker.
Premium pay received by a teacher employed by an independently accredited school or a teacher employed by the State of Iowa who was designated by the governor as an eligible worker.
Teacher retention payment received by a teacher that was funded from moneys received by the State of Iowa from the elementary and secondary school emergency relief fund pursuant to the federal Coronavirus Response and Relief Appropriations Act or the American Rescue Plan Act of 2021.
Teacher retention payment received by a teacher employed by a private school or specially accredited school, that was funded from the private sector worker premium pay program administered by the department of education that was funded from the State of Iowa moneys.
Recruitment and retention bonus received by a child care worker through the recruitment and retention bonus program administered by the department of human services.
This modification can only be claimed on Column B.
Column A (Additions): Other income not included in federal taxable income that is taxable for Iowa purposes Column B (Subtractions): Other income included in federal taxable income that is not taxable Iowa purposes
Certain Iowa tax credits require taxpayers who claim those credits to make adjustments to their itemized deductions for the contributions associated with those credits. The amount of the contributions associated with the credits should be added back to taxable income. Those credits include:
Charitable Conservation Contribution Tax Credit
Endow Iowa Tax Credit
Farm-to-Food Donation Tax Credit
Hoover Presidential Library Tax Credit
School Tuition Organization Tax Credit
This modification can only be claimed on Column A.
Add lines 1 through 11.
Subtract line 12, column B from line 12, column A.
If you or your spouse participate in the Iowa 529 Plan College Savings Plan or the Iowa Advisor 529 Plan, each may deduct an amount contributed not to exceed $5,800 per beneficiary. This deduction is only available for contributions to Iowa 529 plans.
You must be the "participant" in the Iowa 529 plan in order to deduct your contributions. If you are not the "participant" in the Iowa 529 plan, you may not deduct your contributions to that plan.
Example: Adam and Tara have 2 children; Charlie and Ruth. Adam opens two 529 accounts – one for Charlie and one for Ruth. Tara also opens two 529 accounts one for Charlie and one for Ruth. Both Adam and Tara can take up to $5,800 per child’s account. Adam and Tara each are eligible for a deduction of up to $11,600. Adam and Tara’s total potential deduction amount is $23,200.
Only contributions to these two Iowa 529 plans qualify for a deduction on the Iowa return; however, a rollover from another state's 529 plan to one of the Iowa plans qualifies toward the deduction for Iowa income tax. If you received a refund of any qualified higher education expenses from an eligible educational institution and recontributed the refund amount consistent with Iowa Code section 422.7(22)(c)(1)(f)(i), you may not deduct the recontribution amount when calculating your Iowa taxable income and the recontribution amount will not be considered when determining whether you have met the annual deduction cap.
Individuals making a contribution on or before the Iowa income tax return filing deadline (April 30 for calendar year tax filers), excluding extensions, can elect to have that contribution treated as though it was made on the last day of the preceding calendar year, which allows them to claim the income tax deduction for the most recently completed tax year.
For taxpayers who are 65 years of age or older and whose Iowa taxable income is less than $100,000, enter 100% of the amount paid for health and dental insurance premiums paid with post-tax funds. Typically, employer health insurance premiums are paid on a pre-tax-basis when they are deducted from wages and are not considered post-tax; and thus, they would not be included as a deduction on this line. Do not include any amount of health insurance that was used as a deduction in the computation of federal taxable income, this includes amounts reported on federal 1040, Schedule A, line 1, and federal 1040, Schedule 1, Part II, line 17.
Enter 100% of the amount paid for:
health insurance premiums paid with post-tax dollars
supplemental health insurance, such as: Medicare B supplemental medical insurance Medicare D voluntary prescription drug insurance
dental insurance premiums paid with post-tax dollars
long-term nursing home coverage premiums paid with post-tax dollars regardless of age
Do NOT include:
“Medicare tax withheld” on your W-2
premiums paid with pre-tax dollars
premiums which are later reimbursed, in the same tax year
The $100,000 taxable income limitation is calculated without regard to filing status, meaning that a single taxpayer, a married taxpayer filing separately, and a couple that files married filing jointly will all have a $100,000 taxable income limitation.
Health Insurance reported on federal Schedule A, line 1
Qualifying taxpayers who reported medical and dental expenses on federal Schedule A, line 1, may deduct, subject to the income limitation, a portion of the health insurance which was not allowed as a deduction to arrive at federal taxable income. The taxpayer should use a ratio of health insurance premiums to total medical expenses included in Federal Schedule A and apply that ratio to the amount not allowed to be deducted for federal taxable income.
Example: Taxpayer T reports the following medical expenses of $10,000 on Federal Schedule A, line 1, the breakdown of the expenses is as follows:
Doctor bills: $2,000
Health insurance premiums: $8,000
Federal Schedule A line 3, reports a 7.5% adjusted gross income limitation of $1,950. This would represent the amount of medical expenses which were not allowed in the calculation of federal taxable income.
Federal Schedule A, line 4, reports $8,050 of allowed medical and dental expenses. This represents the amount of medical expenses which were allowed in the calculation of federal taxable income.
Assuming the $100,000 income limitation is not exceeded, Taxpayer T could include a portion of the health insurance which was not allowed in the calculation of federal taxable income as an Iowa health insurance deduction. The allowed portion would be calculated as follows:
Disallowed portion of medical expenses x the health insurance portion of medical expenses/total medical expenses reported on federal Schedule A, line 1. In this example the deduction would be: $1,560 which is $1,950 x ($8,000/$10,000)
$1,950 (disallowed portion of medical expenses) x $8,000 (health insurance premiums) / $10,000 (total medical expenses claimed on federal Schedule A, line 1) = $1,560
To calculate taxable income for purposes of this deduction, use the following calculation:
Health Insurance Taxable Income Worksheet Health Insurance Taxable Income Worksheet 1. Report the amount of Iowa taxable income reported on IA 1040, line 4. 1. ________ 2. Report the following adjustments, if applicable: (a) Federal itemized or standard deduction to the extent it does not exceed federal adjusted gross income 2a.________ (b) Federal personal exemption deduction 2b.________ (c) Federal Qualifying Business Income Deduction 2c.________ (d) Social Security income reported on federal 1040, line 6b 2d.________ (e) Pensions or other retirement income received from a source that is not taxable in Iowa, reported on IA 1040, Schedule 1, lines 4 and 7 2e.________ (f) Health insurance deduction reported IA 1040, Schedule 1, line 15 2f.________ (g) Total of lines 2a through 2f. 2g.________ 3. Add line 2g to line 1 3. ________
If line 3 is less than $100,000 and you are age 65 or older you are eligible to deduct health and dental insurance paid with post-tax funds.
If line 3 is $100,000 or more you are NOT eligible to deduct health and dental insurance, IA 1040, Schedule 1, line 15 should be changed to zero.
The deduction must be reduced by the amount of any premium reimbursement from Health Reimbursement Arrangements (HRAs).
Any Excess Advance Premium Tax Credit repayment from the 2024 federal form 1040, Schedule 2, line 1a may be entered on IA 1040, Schedule 1, line 15 in the year paid for taxpayers who are eligible to claim an Iowa health insurance deduction. Any repayment calculated on your 2025 federal return cannot be included on the 2025 IA 1040, Schedule 1, line 15.
The Net Premium Tax Credit from the 2025 federal form 1040, Schedule 3, line 9 may be reportable as Other Income on the 2026 IA 1040, Schedule 1, line 11. The federal Net Premium Tax Credit is reportable income to the extent this credit was a reimbursement for health insurance premiums deducted from Iowa income in a prior year.
If the deduction is taken on the IA 1040, Schedule A (For tax years prior to 2023), then the federal tax guidance should be followed when addressing the complications due to the impact of the Federal Excess Advance Premium Tax Credit repayment and the Net Premium Tax Credit.
Households Where One Spouse is Age 65 or Older
Assuming the taxpayer’s income is below the income limit, a taxpayer age 65 or older may deduct the cost of health benefits coverage or insurance which covers the taxpayer’s spouse or a dependent. If the spouse who is under the age of 65 or dependent pays for the health coverage the expense would not qualify for the deduction.
Married Separate Filers: If both spouses have self-employment income, the deduction for self-employed health insurance must be allocated between the spouses in the ratio of each spouse’s self-employment income to the total self-employment income of both spouses. If health insurance premiums are paid directly by one spouse, that spouse will claim the entire deduction.
If both spouses paid through a joint checking account, the deduction is allocated between the spouses in the ratio of each spouse’s Iowa taxable income to the total Iowa taxable income of both spouses. For this Iowa taxable income calculation, do not include the health insurance deduction. If one spouse is employed and has post-tax health insurance premiums paid through wages, that spouse will claim the entire deduction. If both spouses pay post-tax health insurance premiums through their wages, each spouse will claim what each spouse paid.
You must complete and include the applicable IA 100 with your return to claim the Iowa capital gain deduction. In addition to the instructions and guidance found in the applicable IA 100, flowcharts to assist in determining if a gain qualifies can be found on the Department’s website.
Married Separate Filers: Divide the capital gain deduction based on ownership of the asset.
Jointly held: Divide equally between spouses.
If other than jointly held: Divide between spouses based on percentage of ownership.
Each spouse must file a separate form of the applicable IA 100.
Enter the Iowa NOL carried forward from a tax year prior to January 1, 2023 from IA 124, Part II, line 5. Include the IA 124 with your return.
Taxpayers who are retired farmers who have materially participated in a farming business for ten years in the aggregate and have held real property used in a farming business for at least ten years may elect to exclude income received from a farm tenancy agreement covering that real property. Include the IA 125 with the return.
For more information about this exclusion, see Iowa Code section 422.7(14) and Iowa Administrative Code rule 701–302.88.
Enter the total of other allowable adjustments as listed below. Include an explanation for each adjustment on a separate form or schedule. Column B should be used to report subtractions, deductions and exclusions from federal taxable income. Report all amounts as a positive number.
Taxpayers who had capital gains in 2025 that were reported on the installment method for federal tax purposes and the entire gain was reported for Iowa in a prior year do not have to report installments.
If income was repaid in the 2025 tax year and was reported and taxed on a prior Iowa return, that income may be deducted on the 2025 tax return. However, it may be to your advantage to take a credit on line 26. You may take either the deduction on Schedule 1, line 19 or take a credit on line 26, but not both.
See IA 1040, Schedule 1, line 14
You may exclude from Iowa taxable income a portion of the disability pay you received in 2025 if you meet ALL of the following conditions:
You received disability pay, and
You were not yet 65 when your tax year ended, and
You retired on disability and were totally and permanently disabled when you retired, and
On January 1, 2025, you had not yet reached the age when your employer's retirement program would have required you to retire.
If you meet all of these conditions, include form IA 2440 . You MUST complete form IA 2440 to take this exclusion. A doctor's statement must accompany each year's return attesting to the taxpayer's complete and permanent disability.
You may deduct up to $2,314 ($4,628 for married filing jointly) in qualifying Iowa First-Time Homebuyer Savings Account contributions made during the tax year. This deduction limitation is based on the account holder, so even though you may have contributed to multiple accounts for more than one beneficiary, your total deduction may not exceed $2,314 ($4,628 for married filing jointly).
Contributions are only deductible if they are made to accounts that have been designated as First-Time Homebuyer Savings Accounts by submitting the Account Holder and Designated Beneficiary Form to the Department. The Account Holder and Designated Beneficiary Form must be submitted to the Department by the due date of the Iowa individual income tax return, April 30 for calendar year filers, of the calendar year following the year in which you opened the account to the address on that form.
The Account Holder and Designated Beneficiary Form must be submitted to the Department separately from your Iowa income tax return.
Taxpayers are also required to complete an Iowa Department of Revenue annual report form and include it with their Iowa income tax return.
Complete and send a First-time Homebuyer Withdrawal Form, 41-163 to the Iowa Department of Revenue when money is withdrawn. Note: this form must be submitted to the Department within ninety (90) days of the date of any withdrawal of funds in any amount from the First-Time Homebuyer Savings Account.
Interest and earnings income from a qualified First-Time Homebuyer Savings Account are exempt from Iowa individual income tax.
An Injured Veterans Grant Program is available through the Iowa Department of Veterans Affairs. Money appropriated for these grants will be given to veterans injured in a combat zone after September 11, 2001. The grants cannot exceed $10,000 per injured veteran. The Department of Veterans Affairs may also receive money from any public or private source for purposes of providing grants to injured veterans.
A deduction is allowed for the amount paid by a taxpayer to the Department of Veterans Affairs for the purposes of providing grants to the Injured Veterans Grant Program to the extent that amount is included in federal taxable income.
The amount of Department of Veteran Affairs grant money received by an injured veteran that is included in the veteran's federal adjusted gross income is not included in the veteran's Iowa taxable income.
To the extent included in federal taxable income, deduct any State Supplementary Assistance payments received for unskilled in-home health-related care services to a family member.
Income from the Iowa Veterans Trust Fund for the following items can be excluded:
Travel expenses directly related to follow-up medical care for wounded veterans and their spouses
Unemployment assistance during a period of unemployment due to prolonged physical or mental illness or disability resulting from military service
For more information see Tax Responsibilities of Servicemembers and Their Spouses .
A deduction is allowed for taxpayers for unreimbursed expenses relating to a human organ transplant to the extent the amount is included in federal taxable income. The taxpayer, while living, who donates all or part of a designated human organ can claim a deduction for unreimbursed expenses such as travel expenses, lodging expenses, and lost wages.
The deduction is limited to $10,000, and a taxpayer can only claim this deduction once.
Any biodiesel production refund received is not included as income for Iowa individual income tax purposes.
Federal Segal AmeriCorps education award payments are excluded from Iowa taxable income.
To the extent included in federal taxable income, the following items can be excluded from Iowa taxable income:
Amounts of victim compensation awards paid under the victim compensation program administered by the Department of Justice under Iowa Code section 915.81
Amounts of victim restitution payments received pursuant to Iowa Code chapters 910 and 915
Amounts of damages awarded by a court, and received by a taxpayer, in a civil action filed by the victim against an offender
If you operate a business, you may qualify for an additional deduction of 65% of the wages paid in the first 12 months up to a maximum deduction of $20,000 per qualifying new employee. This deduction is in addition to the wage deduction you were allowed on federal Schedule C. To qualify, the new employee(s) must be disabled or an ex-offender on parole, probation, or in a work release program. All types of businesses may qualify for this deduction for hiring qualifying ex-offenders. However, the deduction for hiring qualifying persons with disabilities is restricted to certain small businesses.
Further information is available online:
Benefit for hiring ex-offenders
Benefit for hiring persons with disabilities
Other federal adjustments from Schedule 1, Part II, prior to the calculation of federal 1040 line 11 (federal AGI) not taken elsewhere on the IA 126. For use on the IA 126 only.
Educators can deduct out-of-pocket educator expenses of up to $200 in excess of the federal deduction limitation ($300), per eligible educator. Do not include expenses already deducted from federal taxable income.
The income a nonresident individual earns for performing emergency response work for an electric utility in Iowa under a mutual aid agreement between Iowa and the state in which the nonresident lives is excluded from Iowa individual income tax. Income received by a nonresident individual for training by an electric utility in Iowa is also excluded.
Out-of-state businesses and individuals performing disaster or emergency-related work in Iowa are not subject to Iowa income tax or withholding. The disaster response period starts ten days before the state-declared or presidential-declared disaster and ends sixty days after the end of the declared state disaster or emergency.
Contributions to a qualified ABLE savings plan trust account made during 2025, on behalf of a designated beneficiary, are deductible from Iowa individual income tax up to a maximum amount, $5,800, allowed per beneficiary per year for purposes of the Iowa ABLE savings plan trust in Iowa Code chapter 12I. Interest and earnings income from an ABLE savings plan trust account are exempt from Iowa individual income tax.
Enter the amount of a federal, state, or local grant provided to a communications service provider during the tax year, to the extent included on Federal Schedule C, line 1, if the grant was used to install broadband infrastructure that facilitates broadband service in targeted service areas at or above the download and upload speeds.
Taxpayers who receive payments from an education savings account may exclude that from Iowa taxable income to the extent it was included in federal taxable income.
See IA 1040, Schedule 1, line 18
Taxpayers may deduct income resulting from the payment by an employer of the taxpayer, whether paid to the taxpayer or to a lender, of principal or interest on any qualified education loan incurred by the taxpayer.
Married Separate Filers: When the adjustment is attributable to a specific spouse, it is taken by that spouse. When the adjustment is not attributable to any one spouse, it must be prorated based on each spouse’s taxable income.
Add lines 14 through 19. Enter as a (negative) number.
Add lines 13 and 20. If less than zero, enter as a (negative) number. Enter here and IA 1040, line 3.
Line: 25
Step: 6
Step Subject: Refundable Credits and Payments
Instruction Year: 2025
The Iowa Earned Income Tax Credit is a refundable credit. This credit is available only to taxpayers who qualify for the federal Earned Income Tax Credit (EITC). To calculate the Iowa Earned Income Tax Credit, multiply your federal EITC by 15% (.15).
To find out if you qualify for federal EITC, taxpayers should visit the IRS for additional information .
If you qualify for the low income exemption and are filing an Iowa return only to claim a refund of the Iowa EITC, check the box between Steps 4 and 5. Skip lines 5 through 19, enter zero on lines 20 and 22, and enter the amount of your Iowa EITC on lines 25, 30, 31, and 32.
Nonresidents and Part-year Residents Nonresidents and Part-year Residents The Iowa EITC must be adjusted using the following formula. Iowa income percentage (IA 126, line 29) ___________ multiplied by the Iowa Earned Income Tax Credit x __________ equals credit on line 25 = __________
Go to Line 24: Child and Dependent Care Credit or Early Childhood Development Credit
Go to Line 26: Other Refundable Credits
Line: 5
Step: 5
Step Subject: Tax, Non-refundable Credits & Checkoff Contributions
Instruction Year: 2025
Iowa now has a flat tax rate of 3.8%.
Alternate tax calculation: You may owe less tax by completing the worksheet below. All filing statuses except filing status 1, Single, may qualify for the Iowa alternate tax computation. Single taxpayers may be eligible for the Iowa income tax reduction; see Iowa Income Tax Reduction Worksheet (41-146) (127.88 KB) Archived .pdf .
The most common taxpayers who benefit from the alternate tax calculation are individuals who claim a head of household filing status, are age 65 and older, and have a filing requirement.
If you are using alternate tax calculation on IA 1040 in lieu of the tax rate calculation, check the box in IA 1040, Step 5.
Special instructions for filing status 3, Married filing separately:
The combined Iowa taxable incomes of both spouses must be used.
The alternate tax between spouses must be prorated in the ratio of the Iowa taxable income of each spouse to the combined Iowa taxable income of both spouses using lines 7-11.
If you are married filing separately and one spouse has a net operating loss that will be carried forward, then you cannot use the alternate tax computation. If the spouse with the net operating loss elects not to carry the net operating loss forward, then you can use the alternate tax computation.
If you do not provide the other spouse’s income on the IA 1040, Step 2, you will not be allowed to use the alternate tax calculation.
B. Spouse A. You or Joint 1a. Iowa taxable income from IA 1040, line 4 1b. Itemized/standard deduction from IA 1040, line 1d 1c. Personal exemption deduction allowed for federal purposes 1d. QBI deduction from IA 1040, line 1e 1e. Net operating loss carryover from IA 1040 Schedule 1, line 17, column B 1f. Lump-Sum distributions of taxable income reported on federal form 4972, line 8 1g. Add lines a through f 1. Total of Line g, columns A and B 1. 2. Enter $13,500 ($32,000 if you or your spouse was 65 or older on 12/31/2025) 2. 3. Income subject to alternate tax calculation. Subtract line 2 from line 1 3. 4. Multiply line 3 by 4.3% (.043) 4. 5. Using the tax rate, determine the tax on the taxable income from the IA 1040, line 5. (Status 3 filers: Calculate tax separately and combine the amounts) 5. 6. Compare the amounts on line 4 and line 5. Enter the smaller amount. If using filing statuses 2, 4, and 5, also enter on IA 1040, line 5. If using filing status 3 and line 4 is less than line 5, continue to line 7. If using status 3 and line 5 is less than line 4, then enter each spouse’s tax from the tax rate schedule on IA 1040, line 5. 6. 7. Taxable income of both spouses from line 1g above 7a. 7b. 8. Total adjusted Iowa taxable income, add lines 7a and 7b 8. 9. Divide the amount on line 7a by the amount of line 8. Enter to the nearest tenth of a percent 9. 10. Multiply line 6 by the percentage on line 9. Enter here and on IA 1040, line 5 10. (You) 11. Subtract line 10 from line 6. Enter here and on IA 1040, line 5 of your spouse’s return 11. (Spouse)
Go to Line 04: Iowa Taxable Income
Go to Line 06: Iowa Lump-Sum Tax
Line: 4
Step: 4
Step Subject: Taxable Income
Instruction Year: 2025
Add lines 2 and 3. Do not include lines 1a through 1f.
Check the box only if using low-income exemption, alternate tax, or tax reduction. The box should not be checked if using the standard tax rate calculation from the Tax Calculation Worksheet, even if you used either worksheet to determine that the standard tax rate calculation was more beneficial.
The following items must be added for the taxpayer (and spouse, if applicable) to determine if you qualify for low-income exemption, alternate tax, or tax reduction:
Iowa taxable income from IA 1040, line 4
Standard deduction or itemized deductions from IA 1040, line 1d not to exceed the amount that is included in IA 1040, line 2
Personal exemption allowed for federal purposes from federal Schedule 1-A, line 37
Qualified business income deduction from IA 1040, line 1e
Any amount of lump-sum distribution separately taxed on federal form 4972
Carryover of net operating loss claimed on the IA 1040 Schedule 1, line 17b
Filing status 1, Single: If you are using filing status 1 (single), you are exempt from Iowa tax if you meet either of the following conditions:
Your Iowa taxable income from all sources, IA 1040, line 4, is $9,000 or less and you are not claimed as a dependent on another person’s Iowa tax return. ($24,000 if you are 65 or older on 12/31/25)
Your Iowa taxable income from all sources, IA 1040, line 4, is less than $5,000 and you are claimed as a dependent on another person’s Iowa return. For purposes of this condition, none of the income listed above is required to be added back to the Iowa taxable income.
Filing status 3, Married Filing Separately: If you are using filing status 3 (married filing separately), you are exempt from Iowa tax if you meet all of the following conditions:
Your Iowa taxable income from all sources, IA 1040, line 4, with the additions above, is $9,000 or less.
You and your spouse’s combined Iowa taxable income from all sources, IA 1040, line 4, with the additions above, is $13,500 or less.
You are not claimed as a dependent on another person’s Iowa return.
All other filing statuses: If you are married filing jointly, head of household, or qualifying surviving spouse, you are exempt from Iowa tax if you meet both of the following conditions:
Your Iowa taxable income from all sources, IA 1040 line 4, is $13,500 or less ($32,000 if you or your spouse was 65 or older on 12/31/25).
You are not claimed as a dependent on another person’s Iowa return.
Nonresidents and Part-Year Residents: In addition to the exemption provisions above, if you were a nonresident or part-year resident and had Iowa-source net income of less than $1,000 (see note below) you are exempt from Iowa tax. For a description of “Iowa-source income”, see the instructions for the IA 126, lines 1 through 24. If you had Iowa taxes withheld and are requesting a refund, or choose to file an Iowa return even though you aren’t required to do so, you must complete the entire IA 1040 and the entire IA 126.
Note: If you were a nonresident or part-year resident and subject to Iowa lump-sum tax (even if Iowa-source income is less than $1,000), you are required to file an Iowa return reporting the lump-sum tax even if you have no regular Iowa income tax liability.
See reciprocal agreement
See Tax Responsibilities of Servicemembers and their Spouses
Married Separate Filers: Married taxpayers filing married filing separately must use the combined income of both spouses in determining eligibility for exemption from tax.
If either spouse has a net operating loss that is carried forward, then the other spouse cannot use the low income exemption. If the spouse with the net operating loss chooses not to carry the loss forward, then the other can claim the low income exemption. A statement must be included with the return saying that the spouse with the net operating loss will not carry it forward.
Go to Line 03: Net Iowa Modifications
Go to Line 05: Iowa Tax
Thursday, March 13, 2025
On March 1, 2022, Governor Kim Reynolds signed House File 2317 . Division VI of that legislation excludes retirement income from Iowa taxable income for eligible taxpayers for tax years beginning on or after January 1, 2023. This guidance describes some of those changes. The Iowa Department of Revenue (Department) will update this guidance and administrative rules in the near future to implement these changes.
To qualify for the retirement income exclusion, the taxpayer must be:
55 years of age or older on December 31 of the tax year, or
Disabled, or
A surviving spouse or a survivor having an insurable interest in an individual who has qualified for the exclusion in the tax year on the basis of age or disability. A survivor other than the surviving spouse is considered to have an “insurable interest” if the survivor is a son, daughter, mother, or father of the annuitant or pensioner, or
A surviving spouse who receives amounts from a deceased spouse’s pension, regardless if the deceased spouse was 55 years of age or older or disabled, if the pension was from employment in a protection occupation, or as a sheriff, deputy sheriff, firefighter, or police officer.
For married couples, the retirement income exclusion is only applicable to a spouse who meets one of the above conditions. If one spouse does not meet one of the above conditions, retirement income attributable to that spouse is not eligible for the exclusion. If both spouses meet one of the above conditions, the taxpayers may exclude all eligible retirement income.
The retirement income exclusion covers “governmental or other pension or retirement plan[s] including defined benefit or defined contribution plans, annuities, individual retirement accounts, plans maintained or contributed to by an employer, or maintained or contributed to by a self-employed person as an employer, and deferred compensation plans or any earnings attributable to the deferred compensation plans…”
For a nonexclusive listing of retirement plans which qualify for the retirement income exclusion see Iowa Administrative Code rule 701-302.47(1). The Department has determined that distributions from the following plans qualify for the exclusion:
Traditional individual retirement accounts (IRA) authorized under section 408(a) of the Internal Revenue Code (IRC)
Roth individual retirement accounts (Roth IRA) authorized under section 408A of the IRC
Roth conversion income
Simplified employee pension (SEP) plans defined under section 408(k) of the IRC
Savings incentive match plans for employees (SIMPLE IRA) defined under section 408(p) of the IRC
Qualified deferred compensation plans including those authorized under section 401(k) of the IRC
Eligible deferred compensation plans authorized under section 457(b) of the IRC
Defined benefit plans, pension plans, profit-sharing plans, or stock bonus plans including IPERS and employee stock ownership plans (ESOP) authorized under section 401 of the IRC
Distributions from a Keogh plan
Eligible combined plans described under section 414(x) of the IRC
The Department has determined that distributions from the following plans do NOT qualify for the exclusion:
Nonqualified deferred compensation plans described under section 409A of the IRC
Nonqualified annuities. Note that nonqualified annuities will commonly report a code of “D” in box 7 of Form 1099-R.
If you have questions about whether a plan not listed above qualifies under the retirement income exclusion, please submit a policy guidance request .
On February 20, 2023, Governor Kim Reynolds signed Senate File 181 . Division III of this legislation amends Iowa Code section 422.16 to clarify that state income tax withholding is not required on distributions of retirement income that are not subject to Iowa income tax. Thus, plan administrators are not required to withhold Iowa tax on distributions from qualifying plans to qualifying recipients.
If a payee does not qualify for the retirement income exclusion, the plan administrator is required to withhold Iowa income tax from these payments on the basis of the withholding tables and formulas available on the Department’s Withholding Tax Information page or withhold Iowa income tax from these payments at the rate of 3.8 percent.
Individuals who qualify for the retirement exclusion and believe tax on their retirement income is being erroneously withheld should contact their plan administrator to request a refund of erroneously withheld Iowa income tax and request that the administrator stop withholding Iowa income tax on future payments. The plan administrator may require the individual to complete a new IA W-4P claiming exemption from withholding.
Any amounts that were correctly withheld, or that were erroneously withheld and you did not notify your plan administrator about, should be reported on your Iowa income tax return and may be refundable to the extent the withheld amount exceeds your Iowa income tax liability.
Plan administrators who are aware that they have erroneously withheld Iowa income tax on qualifying retirement income must repay the overwithheld amount to the recipient by the end of the tax year. Plan administrators have two options:
Refund the overwithheld amount directly to the recipient and obtain a written receipt showing the date and amount of the repayment from the recipient. The plan administrator may then file an amended withholding tax return, for the period in which the tax was originally claimed, and request a refund of tax paid that was not due.
Apply the overwithheld amount against future tax required to be withheld on distributions to the recipient in the same calendar year, if any. If the recipient does not have any income from the retirement plan subject to Iowa income tax, the plan administrator must use the first option.
If the amounts were not erroneously withheld, or if the plan administrator learns of the error in the following tax year, they should file a 1099-R with the Department and furnish a 1099-R to the taxpayer reporting the amount withheld. The taxpayer should file their Iowa income tax return as usual to report the amount withheld and seek a refund.