House Study Bill 304 - Introduced HOUSE FILE _____ BY (PROPOSED COMMITTEE ON WAYS AND MEANS BILL BY CHAIRPERSON KAUFMANN) A BILL FOR An Act modifying property tax calculations, and including 1 applicability provisions. 2 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 3 TLSB 2949YC (4) 91 jm/md
H.F. _____ Section 1. Section 443.2, subsection 1, Code 2025, is 1 amended to read as follows: 2 1. Before the first day of July in each year, the county 3 auditor shall transcribe the assessments of the townships and 4 cities into a book or record, to be known as the tax list, 5 properly ruled and headed, with separate columns, in which 6 shall be entered the names of the taxpayers, descriptions of 7 lands, number of acres and value, numbers of city lots and 8 value, and each description of tax, with a column for polls and 9 one for payments, and shall complete it by entering the amount 10 due on each installment, separately, and carrying out the total 11 of both installments. The total of all columns of each page of 12 each book or other record shall balance with the tax totals. 13 After computing the amount of tax due and payable on each 14 property, the county auditor shall round the total amount of 15 tax due and payable on the property to the nearest even whole 16 dollar and, if applicable, reduce the amounts due and payable 17 as required under section 444.25 . 18 Sec. 2. Section 444.1, Code 2025, is amended to read as 19 follows: 20 444.1 Basis for amount of tax. 21 In all taxing districts in the state, including townships, 22 school districts, cities , and counties, when by law then 23 existing the people are authorized to determine by vote, or 24 officers are authorized to estimate or determine, a rate of 25 taxation required for any public purpose, such rate shall in 26 all cases be estimated and based upon the adjusted taxable 27 valuation of such taxing district for the preceding calendar 28 year and subject to the limitation of section 444.25 . 29 Sec. 3. Section 444.2, Code 2025, is amended to read as 30 follows: 31 444.2 Amounts certified in dollars. 32 When an authorized tax rate within a taxing district, 33 including townships, school districts, cities , and counties, 34 has been thus determined as provided by law, the officer or 35 -1- LSB 2949YC (4) 91 jm/md 1/ 9
H.F. _____ officers charged with the duty of certifying the authorized 1 rate to the county auditor or board of supervisors shall, 2 before certifying the rate, compute upon the adjusted taxable 3 valuation of the taxing district for the preceding fiscal year, 4 the amount of tax the rate will raise, stated in dollars, 5 subject to the limitation of section 444.25, and shall certify 6 the computed amount in dollars and not by rate, to the county 7 auditor and board of supervisors. 8 Sec. 4. Section 444.3, Code 2025, is amended to read as 9 follows: 10 444.3 Computation of rate. 11 When the valuations for the several taxing districts shall 12 have been adjusted by the several boards for the current 13 year, the county auditor shall thereupon apply such a rate, 14 not exceeding the rate authorized by law, as will raise the 15 amount required for such taxing district, and no larger amount , 16 subject to the limitation under section 444.25 . For purposes 17 of computing the rate under this section , the adjusted taxable 18 valuation of the property of a taxing district does not include 19 the valuation of property of a railway corporation or its 20 trustee which corporation has been declared bankrupt or is in 21 bankruptcy proceedings. Nothing in the preceding sentence 22 exempts the property of such railway corporation or its trustee 23 from taxation and the rate computed under this section shall 24 be levied on the taxable property of such railway corporation 25 or its trustee. 26 Sec. 5. Section 444.22, Code 2025, is amended to read as 27 follows: 28 444.22 Annual levy. 29 In each year the director of revenue shall fix the rate in 30 percentage to be levied upon the assessed valuation of the 31 taxable property of the state necessary to raise the amount for 32 general state purposes as shall be designated by the department 33 of management , subject to the limitation under section 444.25 . 34 Sec. 6. NEW SECTION . 444.25 Property tax amount limitation 35 -2- LSB 2949YC (4) 91 jm/md 2/ 9
H.F. _____ reduction. 1 1. For purposes of this section: 2 a. Base year means the assessment year preceding the 3 assessment year used to calculate property taxes due and 4 payable in the applicable fiscal year. 5 b. Local taxing authority means a city, county, community 6 college, school district, or other governmental subdivision 7 located in this state and authorized to certify a levy on 8 property located within such authority. 9 c. New construction means buildings, structures, or 10 improvements constructed or relocated on or made to the parcel. 11 d. Parcel means each separate item shown on the tax list, 12 manufactured or mobile home tax list, schedule of assessment, 13 or schedule of rate or charge. 14 e. Property taxes means annual ad valorem taxes imposed 15 on the parcel which are collectable by the county treasurer 16 following application of all applicable exemptions and credits, 17 and shall not include special assessments, amounts levied under 18 chapter 468, or taxes under chapter 435. Property taxes also 19 do not include taxes levied as the result of a property tax 20 levy approved at election or that portion of any property tax 21 levy imposed that is for the payment of principal and interest 22 on bonds or other indebtedness the issuance of which was 23 approved at election, including refunding bonds issued for the 24 repayment of bonds that were approved at election. 25 f. Qualified parcel means a parcel that is not located 26 in an urban renewal area under chapter 403 or an urban 27 revitalization area under chapter 404, is not wind energy 28 conversion property as defined in section 427B.26, and for 29 which none of the following apply: 30 (1) The parcel changed ownership during the base year. 31 (2) New construction occurred on the parcel during the base 32 year. 33 (3) The parcels assessment for the base year was a partial 34 assessment as the result of incomplete new construction or 35 -3- LSB 2949YC (4) 91 jm/md 3/ 9
H.F. _____ improvements. 1 (4) The parcel was omitted from assessment or fraudulently 2 withheld from assessment in the base year. 3 (5) The parcels property taxes were suspended or abated 4 under sections 427.8, 427.9, and 427.10. 5 (6) The parcels classification is different from the base 6 year. 7 2. a. For property taxes due and payable in fiscal years 8 beginning on or after July 1, 2026, if the amount of property 9 taxes otherwise calculated to be due and payable on a qualified 10 parcel of residential property or agricultural property 11 exceeds one hundred three percent of the actual amount of 12 property taxes due and payable on the parcel in the immediately 13 preceding fiscal year, such amount shall be reduced as provided 14 in subsection 3. If, however, improvements or renovations, not 15 amounting to new construction, occurs on the property during 16 the base year, the threshold amount of property taxes shall be 17 one hundred three percent plus the percentage of the parcels 18 taxable value attributable to the improvements or renovations. 19 Improvements or renovations do not include normal and necessary 20 repairs to an existing building or improvement, not amounting 21 to structural replacements or modifications. 22 b. For property taxes due and payable in fiscal years 23 beginning on or after July 1, 2026, if the amount of property 24 taxes otherwise calculated to be due and payable on a qualified 25 parcel of commercial property or industrial property exceeds 26 one hundred eight percent of the actual amount of property 27 taxes due and payable on the parcel in the immediately 28 preceding fiscal year, such amount shall be reduced as provided 29 in subsection 3. If, however, improvements or renovations, not 30 amounting to new construction, occurs on the property during 31 the base year, the threshold amount of property taxes shall be 32 one hundred eight percent plus the percentage of the parcels 33 taxable value attributable to the improvements or renovations. 34 Improvements or renovations do not include normal and necessary 35 -4- LSB 2949YC (4) 91 jm/md 4/ 9
H.F. _____ repairs to an existing building or improvement, not amounting 1 to structural replacements or modifications. 2 c. Property taxes levied by a political subdivision that did 3 not exist for the immediately preceding fiscal year shall not 4 be included in the calculation of the property tax to be due 5 and payable for the fiscal year and shall not be reduced under 6 subsection 3. 7 3. a. If the total amount of property taxes due and 8 payable on the parcel exceeds the applicable threshold for 9 the parcel under subsection 2, the amount of property taxes 10 due and payable to each taxing authority that certified for 11 levy property taxes on the parcel in excess of the applicable 12 threshold percentage of such amount levied by that taxing 13 authority on the parcel in the immediately preceding fiscal 14 year shall be reduced by the amount by which the parcels 15 total amount of property taxes due and payable for all taxing 16 authorities exceeds the applicable threshold for the parcel 17 under subsection 2. 18 b. The amount of the reduction shall be proportionately 19 applied among the various levies for property taxes, or 20 portions thereof, of those taxing authorities that certified 21 for levy property taxes on the parcel in excess of the 22 applicable threshold percentage of such amount levied by that 23 taxing authority on the parcel in the immediately preceding 24 fiscal year. 25 c. The reductions shall be made by the county auditor prior 26 to delivery of the tax list prescribed in chapter 443 to ensure 27 accurate statement of taxes under section 445.5. 28 4. The director of the department of revenue shall adopt 29 rules pursuant to chapter 17A to administer and interpret this 30 section. 31 Sec. 7. Section 445.5, subsection 1, paragraphs e, f, g, and 32 h, Code 2025, are amended to read as follows: 33 e. The complete name of all taxing authorities receiving a 34 tax distribution, the amount of the distribution, the amount of 35 -5- LSB 2949YC (4) 91 jm/md 5/ 9
H.F. _____ any reduction resulting from section 444.25, and the percentage 1 distribution for each named authority, listed from the highest 2 to the lowest distribution percentage. 3 f. The consolidated levy rate for one thousand dollars 4 of taxable valuation multiplied by the taxable valuation to 5 produce the gross taxes levied before application of credits 6 against levied taxes for the previous and current fiscal years 7 and before any reduction resulting from section 444.25 . 8 g. The itemized credits against levied taxes deducted from 9 the gross taxes levied in order to produce the net taxes owed 10 for the previous and current fiscal years and the amount of any 11 reductions under section 444.25 for previous and current fiscal 12 years . 13 h. The total amount of taxes levied by each taxing authority 14 in the previous fiscal year and the current fiscal year and the 15 difference between the two amounts, expressed as a percentage 16 increase or decrease , and the amount of any reduction to a 17 taxing authority resulting from section 444.25 . 18 Sec. 8. Section 445.57, subsection 1, Code 2025, is amended 19 to read as follows: 20 1. On or before the tenth day of each month, the county 21 treasurer shall apportion all taxes collected during the 22 preceding month, except partial payment amounts collected 23 pursuant to section 445.36A, subsection 1 , partial payments 24 collected and not yet designated by the county treasurer 25 for apportionment pursuant to section 445.36A, subsection 26 2 , partial payments collected pursuant to section 435.24, 27 subsection 6 , paragraph a , and partial payments collected and 28 not yet designated by the county treasurer for apportionment 29 pursuant to section 435.24, subsection 6 , paragraph b , among 30 the several funds to which they belong according to the amount 31 levied for each fund, as adjusted under section 444.25, if 32 applicable, and shall apportion the interest, fees, and costs 33 on the taxes to the general fund, and shall enter those amounts 34 upon the treasurers cash account, and report the amounts to 35 -6- LSB 2949YC (4) 91 jm/md 6/ 9
H.F. _____ the county auditor. 1 Sec. 9. IMPLEMENTATION OF ACT. 2 1. Section 25B.2, subsection 3, shall not apply to this Act. 3 2. Section 25B.7 shall not apply to this Act. 4 Sec. 10. APPLICABILITY. This Act applies to property taxes 5 due and payable in fiscal years beginning on or after July 1, 6 2026. 7 EXPLANATION 8 The inclusion of this explanation does not constitute agreement with 9 the explanations substance by the members of the general assembly. 10 This bill provides that for property taxes due and payable 11 in fiscal years beginning on or after July 1, 2026, if the 12 amount of property taxes otherwise calculated to be due 13 and payable on a qualified parcel of residential property 14 or agricultural property exceeds 103 percent of the actual 15 amount of property taxes due and payable on the parcel in the 16 immediately preceding fiscal year, such amount due shall be 17 reduced. Similarly, if the amount of property taxes otherwise 18 calculated to be due and payable for such fiscal years on a 19 qualified parcel of commercial property or industrial property 20 exceeds 108 percent of the actual amount of property taxes 21 due and payable on the parcel in the immediately preceding 22 fiscal year, such amount shall be reduced. If, however, 23 improvements or renovations, not amounting to new construction, 24 occur on the property during the base year, as defined in the 25 bill, the threshold amount of property taxes shall be 108 26 percent plus the percentage of the parcels taxable value 27 attributable to the improvements or renovations. Improvements 28 or renovations do not include normal and necessary repairs 29 to an existing building or improvement, not amounting to 30 structural replacements or modifications. 31 Under the bill, property taxes means annual ad valorem 32 taxes imposed on the parcel which are collectable by the county 33 treasurer following application of all applicable exemptions 34 and credits, and shall not include special assessments, amounts 35 -7- LSB 2949YC (4) 91 jm/md 7/ 9
H.F. _____ levied under Code chapter 468, or taxes under Code chapter 435. 1 Property taxes also do not include taxes levied as the result 2 of a property tax levy approved at election or that portion 3 of any property tax levy imposed that is for the payment of 4 principal and interest on bonds or other indebtedness the 5 issuance of which was approved at election, including refunding 6 bonds issued for the repayment of bonds that were approved at 7 election. 8 The limitations established in the bill apply to qualified 9 parcels. Qualified parcel means a parcel that is not located 10 in an urban renewal area under Code chapter 403 or an urban 11 revitalization area under Code chapter 404, is not wind energy 12 conversion property, and for which none of the following apply: 13 (1) the parcel changed ownership during the base year; (2) 14 new construction occurred on the parcel during the base year; 15 (3) the parcels assessment for the base year was a partial 16 assessment as the result of incomplete new construction or 17 improvements; (4) the parcel was omitted from assessment or 18 fraudulently withheld from assessment in the base year; (5) 19 the parcels property taxes were suspended or abated under 20 Code sections 427.8, 427.9, and 427.10; or (6) the parcels 21 classification is different from the base year. 22 If the total amount of property taxes due and payable on the 23 parcel exceeds the applicable threshold for the parcel under 24 the bill, the amount of property taxes due and payable to each 25 taxing authority that certified for levy property taxes on the 26 parcel in excess of the applicable threshold percentage of 27 such amount levied by that taxing authority on the parcel in 28 the immediately preceding fiscal year shall be reduced by the 29 amount by which the parcels total amount of property taxes due 30 and payable for all taxing authorities exceeds the applicable 31 threshold for the parcel. The amount of the reduction is 32 proportionately applied among the various levies for property 33 taxes, or portions thereof, of those taxing authorities that 34 certified for levy property taxes on the parcel in excess of 35 -8- LSB 2949YC (4) 91 jm/md 8/ 9
H.F. _____ the applicable threshold percentage of such amount levied 1 by that taxing authority on the parcel in the immediately 2 preceding fiscal year. The reductions are to be made by the 3 county auditor prior to delivery of the tax list prescribed in 4 Code chapter 443 to ensure accurate statement of taxes under 5 Code section 445.5. 6 The bill makes corresponding changes to various other 7 provisions of the Code relating to the calculation and 8 collection of property tax amounts. 9 The bill may include a state mandate as defined in Code 10 section 25B.3. The bill makes inapplicable Code section 11 25B.2(3), which would relieve a political subdivision from 12 complying with a state mandate if funding for the cost of 13 the state mandate is not provided or specified. Therefore, 14 political subdivisions are required to comply with any state 15 mandate included in the bill. 16 The bill makes inapplicable Code section 25B.7. Code 17 section 25B.7 provides that for a property tax credit or 18 exemption enacted on or after January 1, 1997, if a state 19 appropriation made to fund the credit or exemption is not 20 sufficient to fully fund the credit or exemption, the political 21 subdivision shall be required to extend to the taxpayer only 22 that portion of the credit or exemption estimated by the 23 department of revenue to be funded by the state appropriation. 24 -9- LSB 2949YC (4) 91 jm/md 9/ 9