Iowa Gov. Kim Reynolds signed a bill into law Thursday that will provide an estimated $100 million in property tax relief while limiting local government spending.
She signed the bill surrounded by Republican lawmakers on the final day of the 2023 legislative session.
Reynolds said it’s the most significant property tax reform in state history.
“Hardworking Iowans have been asking for property tax relief, and today we’re delivering on that ask,” she said.
The bill passed the legislature earlier in the week with near-unanimous support.
It limits how much revenue cities and counties can bring in through property taxes for their general levy, requiring some communities to lower their property tax rates starting with Iowans’ property tax bills that are due in the fall of 2024.
If the total assessed value used to calculate taxes grows by 3 to 6%, that local government will be limited to 2% revenue growth for its general levy. If total assessed value increases by more than 6%, revenue growth for the general levy is limited to 3%. Local officials who want to exceed those limits could put the issue on the ballot for a vote.
Communities that see their taxable valuation grow by less than 3% won’t have to change their property tax rates.
Senate Majority Leader Jack Whitver, R-Grimes, said GOP leaders heard Iowans loud and clear.
“They were shocked, appalled and concerned with the drastic assessment increases to their property, and extremely concerned about what it would mean for their property taxes,” he said. “We promised on the opening day of this session that we would address this issue. And today marks the day that we keep that promise.”
The new law will also deliver new property tax relief to seniors and veterans, and it requires local governments to provide detailed information to taxpayers about tax rates and what their money is being used for.
House Speaker Pat Grassley, R-New Hartford, said the new law puts lawmakers in a good position to continue working on tax cuts and property tax changes next year.
“This is just the beginning of this conversation, not only about property tax, but taxes as a whole for Iowans,” he said. “We understand that you’re facing pressure from inflation, and we want to continue to provide relief through letting you keep more of your money or sending more money back to you.”
Reynolds also said once again Thursday that she wants to eliminate the state income tax, an issue that is expected to come up in 2024.
