Understanding Property Taxes in Iowa: A Simplified Overview

posted on Tuesday, December 3, 2024 in Government Affairs

Property taxes in Iowa play a significant role in the financial health of property owners, local governments, and communities. Recent changes in property values, legislative actions, and tax rates have highlighted the complexities of the system and its impact on stakeholders. With property assessments rising significantly since 2021, and new laws limiting local government revenue, understanding how these changes interact is essential.

---

Since 2021, property sale prices in Iowa have increased notably, causing many property assessments to fall outside the state-required range of 95%-105% of sale prices. To comply, county assessors have adjusted property values to align with market conditions. Without these proactive adjustments, the Iowa Department of Revenue can issue Equalization Orders, which uniformly increase property values across classifications. These orders can create inequities, so assessors aim to prevent them by recalibrating assessments based on actual sales and values. For example, in Black Hawk County, a commercial property assessed at $283,940 in 2021 was sold for $609,000. Its 2023 reassessed value is now $487,460.

In 2023, property assessments across Iowa rose by an average of 22%, prompting the Legislature to pass a bipartisan law capping how much local governments can collect from this growing tax base. At the same time, the residential rollback rate dropped to 46.34%, its lowest level in 45 years. While these changes reduce the taxable portion of property values, they also limit local government revenue, creating challenges despite rising property values. For commercial properties, the rollback rate remains at 90%.

Property taxes in Iowa are calculated using a multi-step process. First, the assessed value of a property is multiplied by the rollback rate to determine its taxable value. This taxable value is then multiplied by the levy rate (per $1,000 of value) to calculate the gross taxes due. Finally, any applicable credits or exemptions are subtracted to arrive at the net taxes owed.

Needless to say, it is a complex system. Recognizing the importance of property tax reform, Grow Cedar Valley is committed to advocating for the convening of a broad coalition representing a variety of stakeholders, including businesses, legislators, local governments, economic development organizations, and property owners, to discuss this multifaceted issue. By facilitating these discussions, we hope to see the development of a comprehensive, balanced approach to reform that promotes fairness and supports long-term economic growth for the Cedar Valley and beyond.

For more details, visit: Property Tax Assessment in Iowa

Or contact:

Adrienne Miller

Director of Business Services & Advocacy

adrienne@growcedarvalley.com

For more information on Grow Cedar Valley’s 2025 Legislative Priorities, click here.