April 7, 2025

Informational Alert - Property Tax Reform Bills

HSB 313 and SSB 1208 are currently under consideration by the Iowa Legislature, which would result in significant changes to the property tax system. The Iowa League of Cities is asking its members to assess how these proposed changes would impact their city by using the prepared City Impact Reports. If you want to get more in the weeds, cities can access the full 2025 City Property Tax Reform - ACGFL Model.

Key Provisions of the Bill

• Implements 2% revenue restriction on CGFL

  • Cities will shift from a rate-limited system to a revenue-growth restriction, limiting general fund levy growth to 2% annually, with some exceptions for new construction and voter-approved levies.  

• Elimination of the Rollback

  • The longstanding rollback mechanism for residential, multi-residential, and commercial property would be eliminated and replaced with new property tax exemptions. This welcome change in how taxable value is calculated will affect both short-term and long-term budgeting strategies. 

  • TIF is limited as an economic driver for cities.

• Replaces various credits with a $25,000 homestead exemption

  • Single-family residential property would receive a new exemption, reducing taxable value and affecting city general fund revenues.

Desired Amendment Language by the League

• Language that considers the impact of inflation on products and materials necessary for cities to continue providing essential services.

  • Discussions have included using an inflationary measure such as CPI or a formula that combines a hard restrictor and an inflationary measure.

• Language to protect the ability of cities to bond for essential corporate purposes.

• Language to protect existing TIF agreements and maintain future TIF’s economic impactfulness.

  • NOTE: Language to restrict the use of perpetual TIF agreements is currently being considered in separate legislation.

If you are meeting with lawmakers, please keep in mind that these bills are expected to be amended and conversations are ongoing. Many legislators are looking for accurate data on impacts and on potential solutions.

Next Steps

Our Government Affairs team is in constant communication with lawmakers and other stakeholders on this legislation and conversations will likely continue until the end of session. If you are reaching out to your legislators to share concerns about how the bill is currently drafted, please include the League’s legislative team to help amplify your message at the statehouse. Stay tuned for future alerts when amendments are proposed or action opportunities arise.

You can view all editions of Legislative Link at iowaleague.org/resource/legislative-link.

Like our membership, the Iowa League of Cities is a non-partisan, service-oriented organization that does not participate in elections, make campaign contributions, or have a political action committee (PAC).