Iowa Tax on Military Pensions: What You Need to Know

Iowa is renowned for its gently sloping hills, beautiful surroundings, and warm residents. However, things might become a little more challenging when it comes to taxes. Whether or not military pensions are taxed in Iowa is one query that is frequently asked by veterans. Depending on a few criteria, the answer can be both yes and no.

Military retirement income for persons who are 55 years of age or older is exempt from taxation in Iowa as of 2021. The military retirement compensation is however taxable by the state if you are under the age of 55. It’s significant to note that other military compensation, such as disability benefits, are not covered by this exemption; rather, it solely pertains to military retirement pay.

In terms of sales tax, Iowa levies a 6% statewide sales tax. There are a few exclusions to this pricing, though. For instance, only 1% of sales tax is applied to food and prescription medications. In addition, some items—such as a few medical supplies and devices—are completely free from sales tax.

You must obtain a sales tax identification number if you own a business in Iowa. You can collect and send sales tax to the state using this, which is also known as a sales tax permit. The Iowa Department of Revenue has an online application form for obtaining a sales tax number. You must start collecting sales tax on all taxable purchases made within the state as soon as you acquire your sales tax identification number.

You must apply for a business registration certificate in order to register your company with the state of Iowa. Through the website of the Iowa Secretary of State, this can also be done online. Depending on the kind of business company you are registering, there are different fees associated with this certificate.

Last but not least, in Iowa, wholesale goods are typically exempt from sales tax. However, you must give your supplier with a current resale certificate if you are buying wholesale goods to resell. This enables you to buy goods without paying sales tax, but when you offer them to clients for a retail price, you’ll have to collect that tax from them as well.

In summary, Iowa does not impose taxes on military retirement income for anyone 55 years of age or older. If you own a business in Iowa, you must register it with the government and obtain a sales tax identification number. In general, wholesale goods are tax-free, but if you’re buying them to resell, you’ll need to give your supplier a resale certificate.