Property tax reform saves $127.33 million for Iowans

Last week, Gov. Branstad released data from the Iowa Department of Revenue that showed Iowa counties were receiving over $78.33 million in state dollars to back fill the property tax reform package supported by House Republicans in 2013. Couple that with the $49 million in business tax credits that were handed out and you end up with a total of $127.33 million in savings for the taxpayer.

Senate File 295 was signed in 2013 and included several provisions. Division one created what is referred to as the Business Property Tax Credit. Properties classified as commercial, industrial and railroads are eligible for the credit. The initial appropriation for the credit was $50 million, next year it will be $100 million, and in all subsequent years it will be $125 million.

Division two of the bill reduced the maximum growth percent because of revaluation on existing residential and agricultural property from four percent to three percent.

Additionally, this division provided for a rollback of commercial, industrial and railroad property of 95 percent in assessment year 2013 and 90 percent thereafter. A rollback is the percent of the property’s value that is subject to tax. This is the division that also created the standing fund appropriation to reimburse local governments for the loss in revenue caused by the new rollback rate.

Division three of the bill created a new property tax classification beginning in assessment year 2015 called human habitat commercial property. This classification encompasses apartments, nursing homes, and assisted living facilities. The new classification is assigned a rollback percentage of 86.25 for assessment year 2015. That rollback then decreases by 3.75 percentage points annually through 2021. In assessment year 2022, the rollback will equal whatever the residential rollback is each year.

The Department of Revenue’s information broken down by county can be found here: https://governor.iowa.gov/wp-content/uploads/2014/09/Property-Tax-Relief-by-County-2013.pdf.