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Iowa’s property tax system would receive a “complete system reboot” under sprawling legislation Republican lawmakers introduced this week.
Leaders of the House and Senate Ways and Means committees, which handle tax policy, unveiled identical bills Thursday they said would amount to Iowa’s biggest property tax overhaul in decades.
“The most important thing I can say today is this is a complete system reboot of the property tax system that has not happened since 1977,” said Rep. Bobby Kaufmann, R-Wilton, who chairs the House Ways and Means Committee.
The legislation, House Study Bill 313 and Senate Study Bill 1208, would:
- Use state general funds to provide $426 million in school funding currently paid for with property taxes.
- Cap most property tax levy growth to 2% each year, excluding revenue from new construction.
- Give each household a $25,000 homestead property tax exemption.
- Raise an existing veterans property tax exemption $3,000 to $7,000.
- Provide a property tax credit to Iowans at least 70 years old who make less than 350% of the federal poverty level.
- Phase out the state’s “rollback” for residential and commercial properties by 2030. The rollback rate, calculated each year, limits the amount of property taxes Iowans pay to a percentage of what their property is worth.
The legislation is Iowa Republicans’ most wide-ranging attempt to deliver on their election-year promises to lower property taxes for Iowans.
Sen. Dan Dawson, R-Council Bluffs, who chairs the Senate Ways and Means Committee, said “Iowans told us we need a better property tax system.”
“We want to give a system to Iowans that actually works for Iowans in the end,” he said.
Property tax plan would eliminate decades-old rollback used to calculate rates
The rollback limits how much of a home or businesses’ value is subject to property taxes. The mechanism has been in place in Iowa for nearly 50 years and puts a 3% limit on how much aggregate taxable value can grow statewide each year.
By eliminating the tool, Republicans say it would make the property tax system fairer and easier to understand for taxpayers, while phasing in the revenue growth restrictions to prevent rising property tax bills.
Kaufmann said eliminating the rollback would give local governments more predictability to budget years in advance, since they won’t have to wait for the rate to be calculated each year to begin the budget process.
“I think that’s one of the best parts of this bill from a local government perspective,” he said. “You can now budget out one, two, three, four, five years in advance without that rollback, which they could not do right now.”
Republicans promise ‘thoughtful process’ and say it’s time to ‘solicit some more feedback’
Republicans stressed that the bill is not a finished product.
Kaufmann said he does not intend to schedule a subcommittee hearing on the bill for at least the next two weeks to give local governments, businesses and other stakeholders time to digest the language and provide feedback.
“This will be a thoughtful process that will take up most of the rest of session to make sure that we get it right and understand all the impacts,” Kaufmann said.
Dawson said he and Kaufmann have been having conversations about property taxes since a 2023 law that instituted a different limitation on property tax growth.
“We’ve been talking to a lot of groups in the last two years and this is the result of some of those conversations,” he said. “Now we need to get it out in the public eye and start to solicit some more feedback.”
‘Iowans should be extremely skeptical’: Democrats react to GOP property tax plan
The top Democrats on the House and Senate Ways and Means committees reacted skeptically to the Republican plan.
“Iowans should be extremely skeptical about the GOP’s latest property tax plan,” Rep. Dave Jacoby, D-Coralville, said in a statement. “Over the last decade, every attempt by GOP lawmakers to fix Iowa’s property tax system has failed. Property taxes just keep going up every year, especially for homeowners. House Democrats believe we need to put money back in the pockets of homeowners and renters immediately.”
Sen. Tony Bisignano, D-Des Moines, said Senate Democrats will be looking at the bill closely.
“On first look, this is an ambitious proposal with significant changes to the property tax system,” he said in a statement. “It’s also clearly not a finished product. Senate Democrats will be reviewing the proposal carefully and seeking input from taxpayers, local communities, and school districts before moving forward.”
Stephen Gruber-Miller covers the Iowa Statehouse and politics for the Register. He can be reached by email at sgrubermil@registermedia.com or by phone at 515-284-8169. Follow him on X at @sgrubermiller.