Does Iowa follow the federal no-tax-on-tips and overtime deductions?
CONFORMS
Iowa follows the federal deductions, so qualified tips and overtime are deductible for state income tax as well as federal, subject to the details and years in the state's own guidance below. You still claim the federal deduction on Schedule 1-A first.
Verified against the official state source below — last verified October 26, 2026
| Deduction | Iowa position |
|---|---|
| Federal tips deduction (IRC §224) | Conforms |
| Federal overtime deduction (IRC §225) | Conforms |
What the state itself says
"Iowa will conform with the federal tax provisions related to no tax on tips, no tax on overtime"
- Official source
- Iowa Department of Revenue, "Impact of One, Big, Beautiful Bill Act on Employee Withholding"
- Tax years covered
- 2025 and 2026 expressly; rolling conformity carries the remaining federal window (2027–2028).
The clear flow-through case: "The starting point for Iowa taxable income is federal taxable income" and Iowa has rolling conformity. Because P.L. 119-21 passed after the 2025 session, the 2026 IA W-4 could not be modified, so the benefit arrives as a larger refund / smaller balance due at filing.
Your federal deduction is separate
Whatever your state does, the federal deductions run on their own rules: check your W-2 codes with the W-2 Code Checker, estimate with the Tips Calculator and Overtime Calculator, and see the glossary for any term. All state positions: the state-by-state index.
State position verified October 26, 2026 from the official source above. State guidance changes; confirm on the source before filing. This page is general information, not tax advice.