– NEW CHANGE –Exclusion of Military Retirement Benefits from Iowa Individual Income Tax. The change is retroactive to January 1, 2014, individuals receiving military retirement benefits may immediately change or eliminate the amount of Iowa tax being withheld or their military pension. They may also leave their withholdings as they are and receive a refund when their taxes are filed. It’s handled through the Defense Finance and Accounting Service (DFAS) an agency of the United States Department of Defense (DoD). There are several methods that may be used to accomplish this. 1. Complete Form IA W-4P, Withholding Certificate for Pension or Annuity Payment https://tax.iowa.gov/sites/files/idr/forms1/1444020.pdf2. DD Form 2866, Retiree Change of Address Request/State Tax Withholding Authorization http://www.dtic.mil/whs/directives/infomgt/forms/eforms/dd2866.pdf3. You can fax the forms to DFAS at 1-800-469-6559 or mail to: Defense Finance and Accounting Service (DFAS) US Military Retirement PayP.O. Box 7130 London, Kentucky 40742-71304. You may also call DFAS at 1-800-321-1080.