Reynolds Unveils Property Tax Reform Plan Aimed at $3B Taxpayer Savings

DES MOINES — Gov. Kim Reynolds on Tuesday introduced a wide-ranging property tax reform bill to the Iowa House and Senate that her office says would save taxpayers an estimated $3 billion over the next six years.

The proposal comes as property taxes across Iowa have increased by an average of more than 10 percent over the past two years, a rate that exceeds inflation, wage growth and population growth, according to the governor’s office.

To slow those increases, Reynolds’ plan would cap local government revenue growth at 2 percent plus new construction for all taxing authorities, with exceptions for debt service and school funding.

“The rate at which property taxes are rising is unacceptable, and Iowans expect legislation that delivers meaningful relief to be passed this year,” Reynolds said in a statement. “Spending drives taxes, and because property taxes are driven by local government, the most reliable way to protect taxpayers is to limit local spending.”

The bill follows a series of roundtable discussions Reynolds held last fall with local officials and community leaders focused on improving efficiency in local government. Some communities have already entered into shared service agreements for functions such as law enforcement, public health and waste management.

To encourage similar efforts statewide, the proposal creates a $10 million grant program to help cities and counties that consolidate positions or pursue shared service agreements with neighboring jurisdictions.

The legislation also would change how often property assessments are conducted, moving from every two years to every three. The governor’s office says the change would reduce volatility in property values and help protect homeowners from sharp increases. Under the proposal, assessors would also be required to justify large increases in assessed value when homeowners appeal, shifting the burden away from property owners.

The bill includes reforms to Tax Increment Financing (TIF) districts, limiting their use to public purposes and capping TIF project durations at 20 years, a move intended to improve transparency and reduce overuse.

Additional provisions focus on housing affordability. The plan would establish a property tax freeze for homeowners aged 65 and older whose homes are valued at $350,000 or less, offering relief for seniors on fixed incomes.

For younger Iowans, the bill proposes the creation of FirstHome Iowa Accounts, modeled after the state’s 529 education savings plans. The accounts would allow families to save for a first home years in advance, helping future homeowners prepare to buy property in Iowa.

The legislation now heads to the Iowa House and Senate, where lawmakers will take up the proposal during the current legislative session.