Senate Ways and Means Committee chair Sen. Dan Dawson, R-Council Bluffs, sits during a subcommittee meeting on Gov. Reynolds’ property tax bill on Feb. 25, 2026, at the Iowa State Capitol.
Senate Ways and Means Committee chair Sen. Dan Dawson, R-Council Bluffs, sits during a subcommittee meeting on Gov. Reynolds’ property tax bill on Feb. 25, 2026, at the Iowa State Capitol.
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Iowa Senate Republicans push for 'deeper' property tax system overhaul

Iowa Senate Republicans say they remain intent on advancing a property tax overhaul that would reverse multi-residential property tax cuts some lawmakers consider their greatest policy misstep.

Speaking before a subcommittee on the Senate’s property tax proposal on Tuesday, March 3, Sen. Jason Schultz, R-Schleswig, said rank-and-file lawmakers in his caucus were “fooled” into supporting the 2013 measure on the promise that creating a new property tax class for multi-residential properties would drive competition and lower rents.

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It aimed to cut property taxes for apartments, nursing homes and assisted-living facilities and gradually lowered their assessment rollback to match residential rates, but it caused significant tax valuation shifts for communities including Des Moines.

As lawmakers eye varying proposals to cut property taxes in the 2026 legislative session, Schultz’s move to vote for the 2013 legislation when he was in the Iowa House loomed as he called it his No. 1 policy mistake.

“I made a mistake,” Schultz said. “… I went back to our forums and I said, ‘Folks, these will be stretched out. These will be extended down and lower rents. Competition will drive down rent, because people are going to be looking for renters. And I learned within a few years that wasn’t going to happen.”

Now looking to remedy his perceived error, Schultz said Senate Republicans’ property tax plan represented a “holistic approach” to fixing Iowa’s property tax system as he joined his GOP colleagues in advancing their caucus’ proposal, Senate Study Bill 3001.

Sen. Tony Bisignano, D-Des Moines, did not immediately act but decided March 4 to move the measure forward to the full Senate Ways and Means Committee — the first bipartisan support any one of the three GOP proposals has received so far. Sen. Cindy Winckler, D-Davenport, did not sign onto advancing the bill.

Sen. Dan Dawson, R-Council Bluffs, who chairs the tax-writing Senate Ways and Means Committee, called for lawmakers to set aside the lobbying influences that may have led them astray in 2013 as he railed against the “property tax cronyism bill.”

Senate Republicans’ 2026 measure is the only proposal that would eliminate Iowa’s decades-old rollback mechanism, which limits a home’s taxable value. The rollback would be replaced with a 50% tax exemption on Iowans’ primary homes, up to $350,000.

Dawson acknowledged the Senate bill is more complicated but warned Iowans’ property tax bills would remain high unless lawmakers are “willing to go deeper.”

He said it’s up to lawmakers to decide if the political will exists to pursue a more complicated overhaul of the property tax system rather than slap Band-Aids on it.

“We’re going to be back here in two years if we do a simple fix,” Dawson said.

But it’s unclear if Senate Republicans will gain support in taking on the complicated rollback mechanism that local officials say can throw a wrench in their ability to plan their finances. Gov. Kim Reynolds’ and House Republicans’ proposals don’t address the rollback.

House Speaker Pat Grassley, R-New Hartford, previously told reporters that House Republicans wanted a proposal that was “easy to understand” and gives certainty to taxpayers.

Nate Ristow, president of the Iowa Taxpayers’ Association, told senators eliminating the rollback would help create a fair property tax system.

“While unrolling what has been 50 years of a tax shift on commercial, industrial taxpayers isn’t simple, the end result is a more understandable tax system,” Ristow said.

Local governments applaud ‘soft’ revenue cap

Reynolds and House Republicans have called for a hard 2% cap on growth, with exceptions for new construction, debt service and school funding.

But the Senate’s plan would tie limits on local property tax revenue growth to inflation — a proposal local governments cheered as making a revenue cap more sustainable by keeping limits aligned with their rising costs.

“Unlike a household budget, municipal budgets are largely driven by ongoing public safety staffing, infrastructure maintenance, contractual opportunities, requirements,” said Chelsea Hoye, director of government affairs for the Iowa League of Cities. “Those costs continue to rise regardless of economic cycles.”

Lucas Beenken, representing the Iowa State Association of Counties and the Iowa State Association of County Supervisors, said this was county officials’ preferred plan as they have grown frustrated with increasing revenue limits in a system that’s “not really working.” He said that could help county officials plan years ahead on their finances.

“We’re cautiously optimistic about just starting over and having (a) jurisdiction-by-jurisdiction level limitation, and then you just have one limitation and move forward,” Beenken said.

Winckler said she was concerned with provisions that would shift funding through school foundation property taxes to the state.

“If we look at potentially where the largest (property tax) increases have been, some of it has been in in the school funding, and part of that has been because of the low funding that they have received from the state,” Winckler said.

Dawson said amendments are planned on school funding language.

Is a senior homestead exemption equitable?

Local governments and other advocates opposed a provision that aims to cut seniors’ property tax bills and asked lawmakers to impose income eligibility limits on a proposed senior homestead exemption.

For Iowans 60 years old and older who have paid off the mortgage on their home, the bill would exempt 100% of the home’s value from property taxes by 2029.

Hoye said this was the Iowa League of Cities’ top concern and encouraged an income-based approach to providing property tax relief for seniors.

“While we understand the intent is to provide relief, a full exemption without a means test risks creating … unintended housing market distortions,” Hoye said. “Particularly in Iowa, rural communities with higher concentrations of older homeowners, we also have concerns, because there is no reliable data set available to accurately calculate the fiscal impact of such a change across our communities.”

Kylie Spies, with the nonprofit Common Good Iowa, said this is “probably the most unequitable provision of this bill” as Americans aged 55 to 75 typically have the highest median net worth and lowest rate of mortgage or equity liens.

Spies recommended “circuit breakers” for those who pay the largest share of their income on property taxes, including low-income seniors, those on fixed incomes or homeowners being priced out in developing neighborhoods.

Dawson said it was “dishonest” to cast the senior homestead exemption as a regressive tax that benefits wealthy Iowans. It is capped at properties valued at $700,000 and only would go to residential properties under a half-acre.

Mixed opinions on indexing gas tax to inflation

Senate Republicans’ plan would index Iowa’s gas tax revenue to inflation, allowing funding for the state’s roads and bridges to grow more over time.

Dawson said local revenue sources would have to be diversified to curb local governments’ reliance on property taxes.

The provision gained support from local officials but saw pushback from groups fundamentally opposed to the idea of a perpetual tax.

Brian Moore, executive director of the Iowa County Engineers Association Service Bureau who has 25 years of experience as a county engineer, applauded the gas tax provisions and said maintaining part of Iowa’s road network relies on a mix of federal, state and local funding.

“If one of those buckets don’t hold up the stool, the network fails,” Moore said. ” … Anything we could do to strengthen any one of these buckets, to secure funding, is a good thing for the entire network.”

Delia Meier, with the group that owns the I-80 Truckstop in Walcott, said automatic tax increases could get “out of hand” and make her business less competitive.

“I think everybody is pro good roads and I think it’s an issue, and I think we should decide on an amount and it should not go up forever,” Meier said.

Marissa Payne covers the Iowa Statehouse and politics for the Register. Reach her by email at mjpayne@registermedia.com. Follow her on X at @marissajpayne.

This article originally appeared on Des Moines Register: Iowa Senate Republicans push for ‘deeper’ property tax system overhaul

Reporting by Marissa Payne, Des Moines Register / Des Moines Register

USA TODAY Network via Reuters Connect

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