Iowa Gov. Kim Reynolds signed a property tax relief bill into law in a ceremony on Monday.
According to Iowa Public Radio, the new law creates a 2% cap on city and county general revenue growth, with an exception for new construction. The new revenue cap does not include levies for debt service, law enforcement, insurance, elections and employee benefits.
Reynolds, who is in the final stretch of her term-limited tenure as governor, said Iowans will save about $4 billion over the next six years, adding that local government spending created the “unacceptable” property tax increases that fueled the new law.
“By capping revenue growth at 2%, with clear guidelines and expectations, this bill brings certainty and discipline to a process that needed both,” Reynolds said.
The new law also replaces Iowa’s homestead tax credit with a 10% homestead property tax exemption up to $20,000, which will be inflation adjusted in the future. The current credit would be worth about the same as a $4,850 exemption.
Furthermore, the new law will lower property taxes paid to school districts by about $150 million, with the state legislature covering the difference to prevent school funding disruptions. Also included in the legislation is a new multi-residential property class for apartment buildings, nursing homes and assisted living facilities and the launch of tax-deductible FirstHome Iowa accounts for saving up to buy a house.
“Months of steady work, thoughtful negotiations and a willingness to compromise meant that Republicans can now deliver Iowans the property tax relief that they deserve,” Reynolds said.
Photo courtesy of Gov. Kim Reynolds’ office
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