Iowa Capital Dispatch
The Iowa House passed the chamber’s version of property tax relief legislation Wednesday — but consensus has yet to be reached with the governor and Senate Republicans on a final package.
House lawmakers passed Senate File 2472 in a 64-23 vote. The bill is what Senate sent to the House earlier in April through a bipartisan vote — but the measure was rewritten by House lawmakers to replace the language with the House GOP proposal on property taxes.
Rep. Carter Nordman, R-Adel, floor manager for the bill, said the measure addresses the fundamental goal House Republicans aimed to address at the beginning of the 2026 legislative session: “Stop funding the growth of government and start prioritizing the growth of Iowa families.”
“For too long, our property tax system has put certainty for government budgets over the certainty of family budgets,” Nordman said. “Today, we flip that script. This plan isn’t about maintaining the status quo for taxing entities, and I recognize that change can be uncomfortable. However, for too long, the status quo has been causing pain for the people we represent. And it’s their discomfort we’re addressing here today.”
The House amendment sets a 2% “hard” cap on local government’s revenue growth. It also would lower the state’s $5.40 uniform levy for school foundation property taxes to $5 by converting the existing homestead tax credit to an exemption while tripling its amount of exemptible tax value to $15,000. Additionally, the bill would move more funding from Secure an Advanced Vision for Education (SAVE) toward property tax relief — raising it to 25% by July 1, 2030.
The House proposal also limits Tax Increment Financing (TIF) districts to periods of 20 years and removes the School Aid Foundation and Emergency Medical Services levies from TIF tax exceptions. Additionally, the bill incorporates components of Gov. Kim Reynolds’ property tax proposal, including creating a $10 million grant to help local governments pursue consolidation and shared service agreements, and creating FirstHome Iowa Accounts based on the Iowa 529 Plan.
Senate plan provides for increases in gas tax, multi-residential properties
Senate Republicans do not necessarily think the House bill is the best way to accomplish this goal. The language approved by the Senate has some significant differences when compared to the House amendment. The Senate language proposed a 2% “soft” cap — allowing for adjustment based on inflation — as well as striking components of a 2023 property tax law and changing parts of the state’s “rollback” system for calculating property taxes.
It also included two components aimed at providing local governments alternative funding streams to make up for revenue loss through property tax cuts. It would add an inflation index to the state’s gas tax, with certain restrictions, as well as reestablish a multi-residential property class for buildings like apartment, distinct from residential properties where a homeowner lives.
These two proposals generated the most discussion during a House public hearing on the measure Tuesday, with landlords saying the changes to a multi-residential property taxes would raise rents, and certain business and conservative groups characterizing the inflation index proposal as an “automatic” fuel tax increase.
Sen. Dan Dawson, R-Council Bluffs, who has led discussions on the Senate property tax proposal, pushed back in Senate meetings against these arguments. He pointed to data showing Iowa rent costs did not fall after a 2013 law reducing multi-residential property taxes. Speakers in favor of the fuel tax indexing have also said there are constraints built into the measure on the gas tax, like a limit of raising the tax by one penny each year, and stating that the tax cannot increase for more than three years in a row.
Dawson said in a statement Wednesday that the Senate has been “clear on our position” on property taxes, and “we continue to maintain that a conversation on the type of property tax relief Iowans want includes diversifying revenue streams, simplifying the system, and bringing the substantial relief Iowa homeowners need.”
“The Senate has offered a plan that overhauls Iowa’s property tax system to make it more predictable and stable for all Iowans and puts the everyday Iowa homeowner at its focus,” Dawson said in a statement. “Property tax reform is not a buffet of items you get to pick and choose from. We did our homework, we worked through the details, and the Senate passed an overwhelmingly bipartisan bill with a vote of 41-4 that works, brings relief to homeowners, and simplifies Iowa’s property tax system.”
Dawson has been critical of previous legislative proposals on property tax brought forward this session, calling for “no more Band-Aids, no more simple approaches” in an Iowa Press interview.
Nordman said during floor debate that the House proposal would meaningfully lower property taxes in the state.
“This is significant,” Nordman said. “This is not a Band-Aid or temporary relief. This is major reform that provides predictability for the taxpayer. Let’s send a clear message today that in the state of Iowa: government exists to serve the taxpayers, not the other way around.”
Democrats argue for immediate rebates
In earlier discussions, several House Democrats voiced complaints with the Senate property tax proposal — but many said they were also not supportive of the House Republican amendment. Rep. Dave Jacoby, D-Coralville, introduced an amendment to substitute the bill for House Democrats’ plan to address property tax costs, which he called a “DEI” plan, standing for direct, effective and immediate relief.
House Democrats’ proposal would cap the growth of property taxes to 4% annually, provide two years of $1,000 rebates for homeowners and $500 for renters, freeze property taxes for Iowans age 65 and older, as well as have the state match retirement benefits for public safety workers — police, firefighters and EMS staff.
Though Democrats have criticized many aspects of Republicans’ spending approach this year as the state faces a budget deficit, Jacoby said providing state funding for property tax relief would help Iowa in the long run.
“Given the fiscal challenges — or, in my opinion, the fiscal mess — that Iowa is in right now, we need to do something in Iowa that builds our state, that adds to our population base,” Jacoby said. “I would contend that the Democrat proposal is the path out of this current mess, by encouraging seniors to stay in their homes, by expanding money for public safety, by offering tax certainty. By limiting homeowners’ liability, and raising the homestead tax credits, we will make Iowa more attractive for people to stay and for people to move here. By growing our population, and by retaining our youth, we can work our way out of this fiscal spiral.”
The amendment was ruled not germane, and a motion to suspend the rules to consider the proposal was voted down 26-61.
Rep. Larry McBurney, D-Urbandale, said he believed the House GOP property tax bill will not lower property taxes for Iowans — but will make it more difficult for local governments to provide services their residents rely on. He said that just as the caps implemented through the 2023 property tax bill did not meaningfully address rising costs, a 2% revenue limitation will also not solve the issue.
McBurney argued “the problem isn’t the cap, the problem continues to be that assessments continue to rise.”
“I don’t care if it’s 2%, 3% — if the value of your property is going up, you will never lower your levy fast enough to be able to truly lower property taxes in this state based on the way the code is written now,” McBurney said. “This bill is not going to fix that. It’s my opinion, come next year, we are going to have residents of this state saying the same thing that they’ve been saying for the last two-plus years: ‘Our property taxes are too high.’”
While both chambers have now passed their versions of property tax legislation, negotiations on a final product that can make it to the governor’s desk are continuing.
Senate Majority Leader Mike Klimesh said in a statement that as a property tax bill has passed the House, he was “optimistic we can work on a compromise that includes aspects of all our plans, helps address the fact that Iowa is the one of the worst states for property tax burdens, and provides relief to the Iowans desperately asking for it.”