For Iowa tax purposes, ESA funds are not taxable income if the funds are used for eligible educational expenses (e.g., tuition and fees, tutoring). See Eligible and Ineligible Expenses.
For federal tax purposes, ESA funds are treated differently. ESA funds used for tuition and fees are not taxable. However, ESA funds used for other types of services (e.g., tutoring, educational therapies) are considered taxable.