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SF 633 – Forest and Fruit-Tree Reservations, Requirements (LSB2007SV)
Staff Contact: Michael Peters (515.281.6934) michael.peters@legis.iowa.gov
Fiscal Note Version – New
Description
Senate File 633 establishes a fee structure for forest and fruit-tree reservations beginning
January 1, 2026. Each acre of qualifying reservation land will be subject to a fee, payable
annually to the county treasurer where the property is located and is deposited into the county
general fund. The Bill categorizes the fees as follows:
• $2 per acre for reservations located in the county where the owner maintains a homestead.
• $3 per acre for reservations located in a county contiguous to the homestead county.
• For all other reservations, including those within city limits, a per-acre fee calculated using a
formula based on the average agricultural property tax rate and corn suitability rating in the
county with the most exempt acres.
Beginning on January 1, 2027, all fees will be subject to an increase based on the percentage of
the Annual Inflation Factor established in this Bill.
The Department of Management is tasked with determining and communicating the calculated
rate by July 1 of each year. This Bill takes effect for assessment years beginning on or after
January 1, 2026, and all fees would be due annually on September 1 to the county treasurer
where the reservation is located. Fees collected in 2026 and 2027 are to be used for any
county general fund purpose. Amounts collected after September 1, 2028, shall be used for
property tax relief for fiscal years beginning on or after July 1, 2029.
This Bill’s effective date is contingent on the passage of 2025 Iowa Acts, Senate Study Bill 1227
(Property Tax Rates, Credits, and Exemptions Bill), Division I.
Background
Current Iowa Code chapter 427C defines forest and fruit-tree reservations, and Iowa Code
section 441.22 establishes the property tax exemption. Under current law, forest reservations
are fully exempt from property tax and fruit-tree reservations are exempt for eight years after
planting.
A property tax preference for forest and fruit-tree property was first enacted in 1906 Iowa Acts,
chapter 52 (Encourage the Planting of Forest and Fruit Trees Act). Qualified property was not
fully exempt under the 1906 legislation but instead limited to a taxable valuation of $1 per acre.
The qualifications for an area to be considered a forest or fruit-tree reservation are substantially
the same today as originally enacted in 1906.
Since 1906, several changes to the preferential taxation of forest and fruit-tree reservations
have been enacted:
• 1933 Iowa Acts, chapter 121 (Assessed and Taxable Value the Same Act) — Assessed
value of forest and fruit-tree reservations was raised to $4 per acre.
• 1974 Iowa Acts, chapter 1231 (Valuation of Property Act) — Assessed value of forest and
fruit-tree reservations was raised to $14.82 per acre.
Fiscal Note
Fiscal Services Division 2
• 1982 Iowa Acts, chapter 1247 (Natural Resources Exemption and Assessment Act) — Rural
forest reserve property was made fully exempt from property tax, while urban forest reserve
property was to be assessed at market value. Fruit-tree reservations were assessed at $20
per acre.
• 1984 Iowa Acts, chapter 1222 (Fruit-Tree and Forest Reservations Act) — Forest and
fruit-tree reservation property was made fully exempt from property tax. The fruit-tree
eight-year limit after planting remains.
The current annual value of the tax exemption to landowners is estimated to average $15.39 per
acre statewide, although there is a significant variation in this amount among benefiting
properties.
For forest and fruit-tree reservations not located in the same or contiguous counties, or those
located inside the corporate limits of a city, the annual fee per acre is based on a formula that
adjusts the average property tax per acre of farmland in the county with the most land in this
exemption program by a factor that reflects how productive the farmland is in that county using
the corn suitability rating. This formula multiplies the average property tax per acre by 13
divided by the county’s average corn suitability rating.
Assumptions
• A total of 841,200 acres with a combined assessed value of $843.8 million will be affected
by the forest and fruit-tree property tax exemption for assessment year (AY) 2024
(FY 2026).
• The number of impacted parcels will remain constant.
• The number of acres in the program will increase at the current average annual rate of
1.2%, while exempt value will increase at the current average annual rate of 11.6%.
Fiscal Impact
The fiscal impact of SF 633 is unknown. It is not possible to estimate the total number of acres
that will be assigned to each of the three fee classes. If all forest and fruit-tree reservations
were assigned to the minimum $2 per acre fee, an additional $1.7 million would be generated
for local governments.
The Department of Management may incur minimal administrative costs to compute and
distribute the annual calculated rate.
Sources
Department of Management
Department of Natural Resources
Department of Revenue
Legislative Services Agency analysis
/s/ Jennifer Acton
April 24, 2025
Doc ID 1526452
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