The Iowa House Ways and Means Committee voted to eliminate the personal income tax on pension and social security benefits. The legislation, House Study Bill 502, is a five-year phase-out of the state tax on both pensions and Social Security benefits. The phase-out in HSB 502 begins in calendar year 2007. According to Committee Chairman Jamie Van Fossen (R-Davenport), Iowa is one of only 15 states that still taxes social security benefits, while most states that impose an income tax exempt at least part of pension income from taxable income; only three states fully exempt all public and private pensions from taxation.
Source: Newletter Jamie Van Fossen's Week in Review (January 13, 2006) Check this link later
For Governor Tom Vilsack 's perspective, see Quad City Times in which it is reported that he acknowledged that taxing retirement income is an issue in border communities such as the Quad-City area, but believes retirees leave the state because of the weather, not the tax climate. Nonetheless, he told reporters and editors he would be more interested if Republicans considered doing away with the ability of Iowans to deduct federal taxes from their state tax liability.