Iowa Veteran Financial Assistance and Tax Benefits
Military Pay Tax Exemption:
Service members on active duty are exempt from paying Iowa state income tax on their military pay.
Military Retirement Pay Exemption:
Military retired pay that is included in federal gross income is completely exempt from Iowa state income tax.
Thrift Savings Plan (TSP) State Tax Note:
While the TSP does not withhold for state or local taxes, distributions are reported annually via IRS Form 1099-R. These distributions are subject to Iowa state tax, and early withdrawals may result in additional taxation.
Tax Exemption for VA Military Disability Retirement Pay:
Disability payments from the U.S. Department of Veterans Affairs—such as pensions or annuities due to service-related injuries—are excluded from Iowa’s taxable income. Qualifying payments may include:
- VA disability compensation and pensions
- Grants for adapted housing
- Vehicle grants for Veterans who’ve lost vision or use of limbs
- Dependent care assistance benefits
VA Dependency and Indemnity Compensation (DIC):
DIC payments made to eligible survivors of fallen Service members or Veterans who died due to service-related causes are not subject to Iowa income tax.
Tax-Free Survivor Benefit Plan (SBP) Payments:
Iowa does not tax income received from SBP, RCSBP, or RSFPP annuities.
Military Student Loan Repayment Exclusion:
Military student loan repayments included in federal income are exempt from Iowa income tax for active-duty and reserve component Service members.
Retirement Withdrawal Tax Relief for Activated Reservists:
Guard or Reserve members called to active duty (state or federal) may withdraw from qualified retirement accounts without state tax or penalties. Federal tax still applies.
Tax Forgiveness for Deceased or Missing Service Members:
Iowa forgives state income tax for Service members if:
- Killed in a combat zone
- Missing in action and presumed dead
- Killed outside the U.S. due to terrorism or military activity
Filing Status Impacts:
- Single: Income tax is forgiven for the year of death and the preceding year.
- Married (Year of Death): Tax is forgiven if filing jointly or separately on a combined return.
- Married (Prior Year): Tax is forgiven for the Veteran’s portion; prior-year returns cannot be amended to change filing status.
Combat Pay Exemption & Filing Extension:
Combat zone pay is excluded from Iowa income tax, mirroring the federal exclusion. Service members have 180 days post-deployment or post-hospitalization to file state taxes.
Iowa Property Tax Relief for Veterans
Military Property Tax Exemption:
Eligible Iowa Veterans may receive a reduction in assessed home value for property tax purposes. Qualifying individuals include:
- Veterans honorably discharged with 18+ months of service (or less due to injury)
- Reserve or National Guard members with 20+ years of service
- Service members with 90+ days of federal active duty (excluding training)
- Veterans who served during qualifying war/conflict periods
- Spouses, surviving spouses, minor children, or widowed parents of eligible Veterans
Disabled Veterans Homestead Tax Credit:
Iowa offers a 100% property tax credit to qualified disabled Veterans and their surviving spouses. Requirements include:
- Ownership and residence in the homestead as of July 1 each year
- Iowa declared as the primary tax residency
- Six months minimum annual occupancy (exceptions apply for nursing home residents)
Eligible Property Size:
- Urban areas: up to ½ acre
- Rural areas: up to 40 acres (including home and outbuildings)
Additional Tax Benefits
Military Spouse Residency Relief (MSRRA):
Under MSRRA, income earned by nonresident military spouses is exempt from Iowa income tax if:
- The Service member is stationed in Iowa under official orders
- The spouse is present in Iowa solely to accompany the Service member
- Both share the same legal residence in another state
Sales Tax Overview:
- Base rate: 6.0%
- Local option (maximum): +1.0%
- Average combined rate: ~6.94%
Recreation
Iowa Lifetime Hunting and Fishing License for Disabled Veterans and Former POWs
Veterans residing in Iowa who have a VA disability rating of 0% or higher, as well as former prisoners of war, are eligible to purchase a lifetime hunting or fishing license for only $7.
License Waiver for Iowa Residents on Active Duty Leave
Service members who claim Iowa residency, are currently serving on active duty, and are home on leave from a duty station outside the state may hunt or fish without a license. To qualify, they must carry their official leave documents and a Leave and Earnings Statement (LES) that shows Iowa state tax withholding while engaging in these activities.
Resident License Pricing for Nonresident Military Personnel
Active duty military members stationed outside Iowa but not residing there may purchase Iowa hunting licenses at the same price offered to residents.
Military & Miscellaneous Benefits
Iowa Veterans Trust Fund:
The Iowa Veterans Trust Fund offers financial support to eligible Veterans and their families across a range of critical needs.
Available Assistance Includes:
- Travel Expenses – Up to $1,000 for wounded Veterans traveling for follow-up medical care
- Unemployment Relief – Up to $3,000 annually (maximum of $6,000 lifetime) for Veterans unable to work due to physical or mental health issues
- Education & Job Training – Financial assistance up to $5,000 over a lifetime
- Counseling Services – Individual or family therapy covered up to $5,000 per year
- Dental Care – Lifetime benefit of up to $10,000
- Hearing Services – Audiology assistance of up to $1,500 per ear annually
- Emergency Home Repairs – Lifetime benefit capped at $10,000
- Vehicle Repair Aid – One-time support of up to $5,000 for emergency vehicle repairs
- Emergency Medical Services – Emergency room visits covered up to $7,500 in total
- Durable Medical Equipment – Up to $5,000 annually with a $10,000 lifetime maximum
Eligibility:
Veterans residing in Iowa who were honorably discharged after completing a minimum of 90 days of active duty service (excluding training) may apply. Spouses and dependents may also be eligible. Applicants must have an income no greater than 300% of the Federal Poverty Guidelines.
Assistance may cover:
- Service-connected unemployment or underemployment
- Vision, hearing, and dental care
- Medical equipment and prescription medications
- Substance abuse and mental health counseling
- Urgent vehicle or housing repairs
- Emergency or transitional housing needs
Iowa Injured Veterans Grant Program:
This program provides up to $10,000 in financial aid to Service members and Veterans who sustained injuries during service. The funds assist families with travel and lodging so they can be present during the recovery period, provided treatment takes place away from the Veteran’s official home of record.
Grant Disbursement Schedule:
Funds are distributed in four payments of $2,500 each:
- Initial Payment: When the Veteran is medically evacuated from a combat zone due to injury
- 30 Days Later: If the Veteran remains hospitalized or is still undergoing treatment/rehabilitation (excluding routine follow-ups)
- 60 Days Later: Continued treatment or rehabilitation must be taking place
- 90 Days Later: Ongoing hospitalization or treatment still required
Who Qualifies:
To qualify, the applicant must:
- Be an Iowa resident who served in the active or reserve U.S. Armed Forces after September 11, 2001, and was honorably discharged, or
- Be a non-Iowa resident who served in the Iowa National Guard under the same conditions
Additional eligibility requirements include:
- The injury must be combat-related and sustained in a combat or hostile fire zone
- Must have required medical evacuation or a hospital stay of 30 consecutive days
- The injury must have occurred in the line of duty
Even after leaving the military, Veterans remain eligible for this grant if they continue receiving care for the specific injury or condition.
Education Programs
Iowa National Guard Service Scholarship (INGSS)
The Iowa National Guard Service Scholarship offers annual financial assistance to members of the Iowa National Guard who are enrolled in qualifying colleges or universities within the state. This scholarship works in tandem with other federal education programs like the GI Bill, Federal Tuition Assistance, and Federal Student Aid.
The scholarship may be used to cover up to 120 semester credit hours, or their equivalent, until the recipient completes a bachelor’s degree. In certain STEM-related programs—science, technology, engineering, or mathematics—an extension of support up to 130 credit hours may be granted.
Award amounts are capped at either 100% of the resident tuition set by the Iowa Board of Regents or 100% of the tuition charged by the institution the student attends—whichever is less.
Iowa War Orphans Tuition Assistance
Children of Iowa-based Service members who died while on active duty or as a result of service-related causes may be eligible for tuition assistance. Those who lost a parent before September 11, 2001, can receive $600 per year, up to a total of $3,000. For children of Service members who passed away on or after September 11, 2001, the benefit increases significantly—up to $11,844 per academic year.
Please note: This assistance is only available if the student is not eligible for federal VA education benefits.
Iowa Operation Recognition – Honorary High School Diplomas for Wartime Veterans
Operation Recognition honors Iowa Veterans who left high school early to serve in the U.S. Armed Forces by awarding them honorary high school diplomas. These diplomas can also be awarded posthumously.
Eligibility includes honorably discharged Veterans who served during:
- World War I: April 6, 1917 – November 11, 1918
- World War II: September 16, 1940 – December 31, 1946
- Korean War: June 25, 1950 – January 31, 1955
- Vietnam War: February 28, 1961 – May 5, 1975
Branstad-Reynolds Scholarship Fund for Children of Fallen Service Members
This scholarship program offers post-secondary education funding to the Children of Iowa Service members who lost their lives while on active duty after September 11, 2001.
Scholarship funds may be used for a wide range of school-related expenses including tuition, books, fees, housing, academic tools, tutoring approved by the institution, and other mandatory educational costs. If all such expenses are met, any remaining funds may be used by the student to cover other financial needs. This state-funded program can be used alongside federal education benefits.
Iowa’s Participation in the Interstate Compact on Educational Opportunity for Military Children (MIC3)
The MIC3 aims to reduce educational challenges for Children in military Families caused by frequent relocations and parental deployments. The compact works to:
- Ensure timely enrollment and avoid delays caused by transferring school records or differing entry requirements
- Simplify student placement so military-connected Children are not disadvantaged by differences in attendance policies, grading systems, or course structures
- Assist with meeting graduation requirements on schedule
- Enable fair access to extracurricular activities and special programs
- Standardize the exchange of information among states, schools, and Families
- Encourage cooperation between school systems, students, and military parents to support academic success
Housing: Below are the locations of Veterans’ residential facilities.
Iowa State Veterans Home at West Marshalltown
Admission Requirements:
To qualify for admission, Veterans must have received an honorable discharge. Eligibility also extends to spouses, surviving spouses, and Gold Star parents of Veterans. Monthly fees are determined based on the individual Veteran’s financial need.
Who Can Receive Care at the Iowa Veterans Home?
The Iowa Veterans Home provides residential and nursing care for honorably discharged Veterans who reside in Iowa. In addition, their spouses, surviving spouses, and Gold Star parents may also be eligible for services.
For spouses, eligibility requires at least one year of marriage to the Veteran prior to applying. Surviving spouses must have been married to the Veteran for at least one year before the Veteran’s death.
Gold Star parents are defined as the mother or father of a U.S. military Service member who died in the line of duty during armed conflict or from a service-connected cause.
Employment and Job Training Benefits for Veterans
Paid Military Leave for Iowa State Employees
Non-temporary Iowa state employees who are members of a U.S. Armed Forces reserve component are entitled to up to 30 workdays of paid military leave each calendar year when called to duty.
Veterans Employment Services through Iowa Workforce Development
Iowa Workforce Development, via IowaWORKS Centers, provides employment support to Veterans, transitioning Service members, and eligible Family members. These services are managed by Veteran Career Planners—who are Veterans themselves—and include:
- In-depth job skills evaluations
- Development of customized employment plans
- Career coaching and goal planning
- Resume building and interview preparation
- Placement into federally-funded job training and employment programs
- Monitoring federal job postings to ensure Veterans receive priority referrals
- Targeted support to meet the unique employment needs of Veterans
State Employment Preference for Veterans in Iowa
Veterans applying for state jobs in Iowa receive preferential treatment through bonus points added to their examination scores.
- 5 Points: Awarded to Veterans with honorable service
- 10 Points: Given to those with a service-connected disability or those receiving VA compensation, pension, or disability benefits
These additional points impact applicant rankings during hiring. This preference does not apply to internal promotions or police/fire chief appointments.
Federal Employment Veterans’ Preference
Under federal law, certain Veterans are granted priority in hiring and retention during downsizing. Eligible applicants may receive either 5 or 10 extra points added to their application scores based on their service history or disability status.
5-Point Preference Eligibility:
Granted to Veterans who:
- Served during a declared war
- Served from April 28, 1952 – July 1, 1955
- Completed over 180 consecutive non-training active duty days between Jan 31, 1955 – Oct 15, 1976
- Served during the Gulf War (Aug 2, 1990 – Jan 2, 1992)
- Served more than 180 consecutive days after Sept 11, 2001, through Aug 31, 2010
- Earned a campaign or expeditionary medal (e.g., Panama, Lebanon, Haiti, Somalia, Southwest Asia)
10-Point Preference Categories:
- Compensable Disability (CP): For Veterans with a 10–29% VA-rated disability
- 30% Disability Preference (CPS): For Veterans with a disability rating of 30% or more
- XP Preference: For those with a service-connected disability or a Purple Heart
- Derived Preference (XP): For Spouses, Surviving Spouses, or parents of eligible Veterans
Spouses of Veterans disqualified from federal work due to a service-connected disability may qualify for the 10-point derived preference if the Veteran is:
- Rated 100% disabled and/or unemployable
- Separated from a job due to their disability
- Unable to obtain employment in their field because of the disability
Veterans who enlisted after Sept 7, 1980 (or began active duty on or after Oct 14, 1982) must have served 24 continuous months unless separated for hardship, disability, or under Title 10 U.S.C. provisions.
USERRA – Uniformed Services Employment and Reemployment Rights Act
USERRA protects job rights for Service members who leave civilian jobs for military service. The law ensures job reinstatement, benefit retention, and fair treatment for both reservists and full-time military personnel.
Key Protections Include:
- Job Reinstatement: Allows up to five years of military leave with reemployment rights, with exceptions for extended enlistments or involuntary recalls
- Disability Accommodation: Employers must provide reasonable accommodations for injuries sustained during service
- Seniority and Benefits: Returning Service members are entitled to the same job, seniority, and benefits as if they never left
- Skills Refreshing: Employers must offer training to help returning Veterans reacquire or update job skills
- Health & Pension Coverage:
- For service over 30 days: continued healthcare coverage available for up to 24 months (at up to 102% of the premium)
- For service under 31 days: coverage is maintained as if the employee were still working
- Pension plans are preserved and must continue accruing during military service
Eligibility:
Applies to National Guard and Reserve members who leave a civilian job for training or active duty. The Department of Labor’s Veterans’ Employment and Training Service (VETS) handles claims under USERRA, including those from federal employees.
Home Base Iowa Program
Home Base Iowa connects Iowa employers with skilled Veterans and their Spouses. The initiative also provides resources to help transitioning military Families settle into Iowa communities, access higher education, and find training opportunities.
The program features job listings, vocational and National Guard training updates, education resources, job fairs, and other relevant career services for Veterans.
Iowa Hilton Honors Military Program
The Iowa Hilton Honors Military Program supports Veterans and transitioning Service members by offering free hotel stays during job-related travel, such as interviews, training, or housing searches. Eligible participants may receive up to 100,000 Hilton Honors points for verified employment-related activities.
Burials and Memorials
The National Cemetery Administration (NCA) honors eligible Veterans and their loved ones by offering a dignified final resting place and a permanent memorial to recognize the Veteran’s devoted service to the country.
Burial benefits include a gravesite in any open national cemetery with available space, grave opening and closing services, ongoing maintenance, a government-issued headstone or marker, a burial flag, and a Presidential Memorial Certificate—all provided at no cost to the family. In certain cases, Veterans may also qualify for a burial allowance. Cremated remains are treated with equal respect and may be buried or placed in a columbarium with the same honors as traditional burials.
These benefits also apply to eligible spouses and dependents. They may be interred with the Veteran, and the burial site will receive perpetual care. The spouse or dependent’s name and their birth and death dates will be added to the Veteran’s headstone free of charge. Notably, spouses and dependents can be laid to rest before the Veteran and do not have to be buried in the same national cemetery.
National Cemeteries include:
Davenport: Oakdale Cemetery Soldiers’ Lot
Keokuk: Keokuk National Cemetery
Iowa VA Benefit Resources
Veterans in Iowa have access to a Regional VA Benefits Office as well as several VA Medical Centers throughout the state.
Iowa VA Regional Benefits Office
- Des Moines: Des Moines Regional Office
Iowa VA Medical Centers
- Des Moines: VA Central Iowa Health Care System
- Iowa City: Iowa City VA Health Care System
Key Information Regarding Iowa Veteran Benefits:
Veterans applying for VA benefits for the first time must include a copy of their DD 214 (Certificate of Release or Discharge from Active Duty). This document confirms discharge classification and includes essential details such as full name, Social Security number, military branch, and dates of service. Most VA benefits are available to those with an honorable or general discharge.
It’s highly recommended to store your DD 214 and medical records securely in a place that is easily accessible to both you and your family—ideally in a fireproof safe or other secure location to protect it from damage or loss.
Eligibility for most VA benefits is tied to an active duty discharge that is not categorized as dishonorable. Active duty encompasses full-time service in the Army, Navy, Air Force, Marine Corps, Coast Guard, or as a commissioned officer in the Public Health Service, Environmental Science Services Administration, or NOAA.
Veterans with a dishonorable discharge issued by a general court-martial may be disqualified from receiving VA benefits. However, incarcerated Veterans and those on parole may still qualify for certain benefits. For those with multiple discharges or unclear statuses, a VA regional office can provide further clarification.
Information current as of October 2023.
Iowa Veteran Benefits
Disabled Veterans in Iowa with a VA disability rating of 90% or lower may be entitled to additional support. Reach out to Vital Veterans Consultants for a complimentary, no-obligation consultation. Our team can evaluate your claim to see if you’re eligible for further benefits.
