Late this past year, Gov. Branstad proposed a new program to encourage veterans to live in Iowa. It is called Home Base Iowa and it is a multi-pronged approach to make Iowa more attractive to veterans. The proposal includes a new income tax exemption for military pension pay. It is anticipated that the exemption will be included in the Home Base Iowa Act—a bill that will include several veteran-friendly provisions.
Iowa currently has no exemption specifically for military pension income. There is a limited pension exclusion for individuals who receive income from a pension, annuity, self-employment retirement plan, deferred compensation, IRA or other retirement plan. Iowans can exclude from Iowa income tax up to six thousand for individuals and up to 12 thousand for married couples. To take advantage of the exclusion, the individual (or spouse) must be 55 years or older on Dec. 31, be disabled or be a surviving spouse or survivor having an insurable interest in an individual who would have qualified. Once the exclusion is applied, the remaining pension income is subject to normal Iowa income tax rates.
The new exemption would completely exempt military pension income from state income tax, but leave all other pension income on the current limited exclusion schedule. There are many states that have no state income tax (South Dakota, for example) — making military pension pay in those states already exempt. There are also several states that have state income tax, but exempt military pensions entirely. This list includes Iowa’s neighbors in Illinois, Kansas and Wisconsin. Finally, many states have special provisions for military pensions that exempt part of that income.
The pension exemption is moving through the Iowa House and is likely to pass.
Another portion of Home Base Iowa is a marketing plan to help make veterans aware of the job opportunities in Iowa and connect them to employers looking for employees. This part of the program will be administered by Iowa Workforce Development, and the appropriation will be going through the Economic Development budget subcommittee that I chair in the House. I believe that there is also strong support for this effort.
Another initiative is a measure that provides for a uniform policy giving veterans, their spouses and their dependents in-state tuition at Iowa community colleges. Iowa’s Regents universities already operate under this policy. The tuition policy is aimed at attracting service members and their families to Iowa for their education, with the additional hope that they stay upon graduation.
According to Iowa National Guard General Tim Orr, there are a large number of veterans approaching retirement in the next five years. Many of these vets are well-trained and are in their late thirties and early forties. Many will be making a decision about where they will be spending the rest of their working years and we would like them to decide that Iowa is the best choice.
The public is invited to come, ask questions and provide input at a forum this Saturday, Feb. 15, at the Roland Public Library, from 1-2 p.m.
If you have any questions or concerns, please contact me. Home phone: 515-382-2352. E-mail: Dave.Deyoe@legis.iowa.gov.