SF2472: Property Tax Reform

SF 2472 – Property Tax Reform  (Final version)

Limit on Annual Revenue Increases

• 2% hard cap on all general levies (includes EMS, Agricultural property, Public Transit)
• 3% hard cap on DART
• 4% hard cap on county hospitals
• New construction is realized as it comes online

No limitation on the following:

• Debt Service Levies
• School funding
• City Special revenue levies (insurance, employee benefits, etc.)
• Most County supplemental levies (insurance, employee benefits, etc.)
• Community college variable levies (insurance, unemployment, etc.)

Extends the previous law of the land, HF 718, by 2 years.

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Residential Property Tax Relief

Converts homestead credit to an exemption (currently equal to $4,850 exemption)

• Phases state funding out over 3 years.
• Year 1 Exemption of 10% with a minimum of $5500 and maximum of $20,000
• Maximum rises with CPI

Current military and senior exemptions stay in place

Homestead credit currently costs the State $175M/year. Funds from the conversion of homestead credit to exemption go toward buying the $5.40 uniform levy down to $4.90 over 3 years.

Multi-residential rollback (currently equal to residential) is increased by 3% in Year 2, and 6% in Year 3.

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Transparency and Data

• Shifts the burden of proof to the assessor if a property value increases by more than 10 percent over 2 years.
• Requires parcel level reporting
• New taxpayer statement – ISAC and League of Cities tasked with working on this with Department of Management
• Allows online posting of tax notices

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Bonding/Debt

• Restricts the use of debt service funds for operating expenses
• Caps local government reserves at 35%
• Creates new restricted fund account for funds that are budgeted for specific infrastructure uses

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Tax Increment Financing

$5.40 Uniform levy

• Pulls the $5.40 levy out of the increment for new TIF projects
• Holds existing debt for cities harmless
• Allows the school district to opt that levy in to a project with no state backfill
• Phases the $5.40 levy down to $4.90 over 3 years

Perpetual TIFS

• Limits increment usage to 60% after 20 years – No new debt allowed above the 60% threshold
• Pulls the $5.40 out of increment after 20 years
• Holds existing debt harmless

Eliminates the Low-Moderate Income restrictions from TIF usage for housing

Final bill DID NOT contain a restriction on the use of TIF revenues for staff and salaries

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Creates First Iowa Home Accounts

Raises the EMS levy cap to $1.50 (from $.75) with a vote

Signed by Governor 5/18/2026. Effective dates: 05/18/2026, 07/01/2026, 01/01/2027. Applicability dates: 01/01/2026, 07/01/2026, 01/01/2027, 07/01/2027, 07/01/2028.