April 10, 2026
Property taxes are a very complex issue. When you talk to 10 different legislators about how best to change the system, you will likely get 10 different responses. This week, however, the Senate accomplished something monumental by coming together to pass a substantial bill that casts a vision for the future. The bill passed 41-4 and now moves to the Iowa House.
The primary difference between the Senate’s proposal and the House or Governor’s versions is that Iowa communities are not all the same; our bill reflects that reality and avoids a “one-size-fits-all” approach. There was much concern about the 2 percent across the board “hard cap” approach. The Senate’s version is a “soft cap.” We have a 2 percent hard cap on the general levy, but are uncapped on the supplemental levies which include expenses like pensions, insurance, etc. There are three major components to our bill: it broadens the tax base to drive down rates, focuses on the Iowa homeowner, and puts us on a firm path toward restoring Iowa’s roads and bridges, while providing alternative revenue sources for local governments to reduce reliance on property taxes.
First, this bill broadens the tax base to help drive down property taxes. We can accomplish this by adjusting the “rollback” so more value is included in the calculation that determines the rate, which will automatically lower that rate. Over time, the rollback has created budgeting uncertainties that have hampered both taxpayers and local governments. To lessen these uncertainties, we have replaced the annual calculation with a fixed rollback rate.
Second, we focus on the homeowner. Our plan includes a permanent 50% taxable value discount for all homestead Iowans and increases this exemption to 60% when Iowans turn 60, with an additional 10% for every decade following. Under this plan, you can be on a path to truly owning your home and see a day when you aren’t paying rent to the government. Third, we provide new revenue streams for local governments. Secondary roads and bridges are a huge expense for rural Iowa. To address this, our proposal includes a fuel tax provision. If we are to see any real reduction in property taxes, we must shift some of the infrastructure burden to other sources, and the fuel tax is an ideal mechanism. The bill ensures that the tax does not increase more than one cent per year and cannot increase more than three years in a row; furthermore, the legislature retains the authority to reduce the fuel tax at any time. Additionally, we would allow the Local Option Sales Tax (LOST) to be increased from 1 cent to 1.25 cents if local boards vote to do so. Finally, we have heard loud and clear that local governments want to post public notices online rather than through expensive paper and mail, so we included that in the bill.
With a bill of this size, there will always be points of criticism. At the end of the day, I believe it was necessary to move this out of the Senate and into the House’s hands for their consideration. We are potentially only a couple of weeks away from the end of the session. We must keep the ball rolling if we are to deliver the finished product that Iowans expect.
