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HF 141 – Military Service Property Tax Exemption, Amount (LSB1476HV)
Staff Contact: Jeff Robinson (515.281.4614) jeff.robinson@legis.iowa.gov
Fiscal Note Version – New
Description
House File 141 increases the value of the Military Service Tax Exemption from the current level
of $1,852 of property value for most veterans and their qualified survivors to $4,000. The
change is effective beginning assessment year 2022 (FY 2024).
Background
Under current law, the Military Service Tax Exemption is equal to $2,778 of property value for
veterans of World War I and qualified survivors and $1,852 for all other qualified situations. The
vast majority of exemption situations qualify for the $1,852 amount. The exemption reduces the
amount of property value subject to property tax. At $1,852 of value and at the statewide
FY 2022 average Military Service Tax Exemption tax rate of $34.03 per $1,000 of taxable
value, the average exemption reduces a veteran’s annual property tax payment by about $63.
The State reimburses local governments for $6.92 per $1,000 of the revenue reduction
associated with the Military Service Tax Exemption. Through the action of the State school aid
formula, the State also reimburses school districts for $5.40 per $1,000. At the $34.03 per
$1,000 statewide average residential property tax rate, this results in $21.71 per $1,000 in
unreimbursed property tax impact that is spread across all types of local governments that levy
a property tax. This impact results in reduced local government property tax revenue.
Assumptions
• The number of taxpayers claiming the Military Service Tax Exemption is estimated at
121,624 for FY 2023 and 117,365 for FY 2024.
• The average tax rate for property subject to the Military Service Tax Exemption for FY 2023
is calculated to be $34.03 per $1,000 of taxed value. That tax rate is assumed to remain
constant for future years.
Fiscal Impact
The Bill increases the current property tax reduction available to qualified veterans, beginning
FY 2024 (taxes payable in the fall of 2023 and the spring of 2024), by an estimated
$8.6 million. This reduction in property tax payments will result in an increase in two State
General Fund appropriations and a decrease in overall local government revenue. The
FY 2024 impact on government finance is projected to be:
• State General Fund Military Service Tax Exemption appropriation increase = $1.8 million
• State General Fund school aid appropriation increase = $1.4 million
• Local government property tax revenue reduction = $5.4 million
Going forward, the number of veterans is expected to decline each year, and this will produce a
declining fiscal impact on State appropriations and local revenue.
Fiscal Note
Fiscal Services Division 2
Sources
Department of Management property tax value and rate files
Legislative Services Agency analysis
/s/ Jennifer Acton
February 1, 2023
Doc ID 1368055
The fiscal note for this Bill was prepared pursuant to Joint Rule 17 and the Iowa Code. Data used in developing this
fiscal note is available from the Fiscal Services Division of the Legislative Services Agency upon request.
www.legis.iowa.gov