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Iowa Passes Property Tax Reform

by Morgan Thomas, Chicago, July 2013

 

Property tax reform was the number one priority of this year's Iowa legislative session. Lawmakers approved a multi-faceted plan that was signed into law by Governor Terry Branstad on June 13th.

 

Senate File 295 includes tax relief for all property owners. Specifically, the new law:

 

  • Rolls back commercial/industrial assessments to 95% of valuation in 2013 and 90% in 2014

  • Phases in a business property tax credit that will ultimately allow companies to pay the residential rate on the first $145,000 of their property's value by fiscal year 2017

  • Creates a new multi-residential property tax classification to reduce taxes for apartments, nursing homes and assisted living centers currently taxed at commercial rates

  • Limits assessment increases in residential and agricultural property to 3% annually, rather than the current 4%

  • Gives telephone companies a partial tax exemption based on the value of their property

 

The tax breaks contained in SB 295 will represent a revenue loss for cities so the state will help cover the losses beginning in 2015. However, critics charge that the state will not be able to match the revenue losses in later years. Projections show local governments stand to lose $2.7 million in 2015. By 2024, the losses could hit $115.7 million, forcing municipalities to cut services, raise taxes or do both.