A new proposal from Iowa House Democrats could send homeowners $1,000 checks, freeze property taxes for seniors, and cap future increases at 4% per year. It’s part of an overhauled effort to make the state’s property tax system feel less punishing, especially as Iowans face some of the highest effective rates in the country, despite the median home price there coming in at almost $200,000 below the national median.
The proposal comes just days before the 2026 legislative session kicks off and is likely to spark one of the first major debates at the Capitol. Republican leaders, including Gov. Kim Reynolds, say their own property tax plan is coming soon, after last year’s effort to eliminate the state’s complex rollback system fell apart.
Now, both parties appear to agree on the problem: Iowa’s property taxes are too high and too unpredictable.
What Iowa House Democrats are proposing
At a news conference announcing the House Democrats’ plan, Rep. Dave Jacoby held up a poster stating that property taxes have risen every year, showing a clear graph of steady increases since fiscal year 2009–10.
“Our plan offers effectiveness—a word that you’ll hear often this year from House Democrats,” Jacoby told the Iowa Capital Dispatch. “And, hopefully in a bipartisan way with Republicans, we want a policy that’s effective. Our plan will work, and Iowans will feel the effects immediately.”
The Democrats’ plan can be broken down into four prongs: freeze property taxes for seniors, triple the homestead tax credit, limit growth to 4% annually, and provide state support for public safety workers’ retirement funds.
But that’s not all. To provide relief while transitioning to the new system, the proposal would give homeowners rebates of $1,000 and renters rebates of $500 for two years.
Property taxes are a ‘top priority’
Jacoby’s statement echoed the words of the state’s governor, Reynolds, at a press conference in October.
“I’ve been holding roundtables with legislators, local government officials, community leaders, superintendents, business owners, health care executives, farmers, and other property taxpayers,” she said.
“The only way I think that we can really reduce the property tax burden is to maybe find new ways to maybe find better and more efficient ways for government at all levels to deliver services to our citizens,” she added.
The key wording of “efficient” and “effective” from both Jacoby and Reynolds points to a frustration with Iowa’s current system of limiting property tax growth. The state’s complicated rollback system, which was instituted in 1978—the last time the state went through a major property tax reform—limits the percentage of a home that is subject to taxation as a hedge against inflation.
It’s a strong idea in theory, preventing your property tax bills from going up 20% even if your home value rises by that amount. However, in practice, it creates confusion for homeowners and wide discrepancies in who pays what.
The rollback amount is set by the Iowa Department of Revenue each year, and it links how much residential home values and agricultural property values can grow together. For example, if statewide residential home values grow by 2%, agricultural values can’t exceed that, and vice versa.
Furthermore, it limits the total taxable value for all of Iowa’s residential property growth to 3% per year.
In 2022, the rollback rate was 54.6501%, which dropped the taxable value of a $350,090 home to $191,325, resulting in a bill of $5,311.53, according to research from Iowans for Tax Relief Foundation.
In 2023, the rollback rate was 46.3428%, which dropped the taxable value of a $411,365 home to $190,638, resulting in a total bill of $5,292.48—a 0.4% decrease from the year before, even though the home grew in market value.
But because the rollback is based on statewide averages rather than local conditions, it often reduces collections in slow-growth areas while allowing significant increases in booming counties.
That means tax rates can rise in struggling jurisdictions to make up shortfalls, while fast-growing areas collect more revenue simply due to rising values, even when rates stay flat, according to a detailed analysis from the Tax Foundation.
Why Iowa’s property tax debate is so heated
Iowa has become a familiar name in the national property-tax conversation for one simple reason: The burden is high by multiple metrics. The Tax Foundation regularly ranks Iowa among the higher-burden states, and even a back-of-the-envelope example illustrates why the issue resonates.
Pair an effective property tax rate around 1.23% with a median home sale price around $225,000, and you’re in the neighborhood of a $2,768 annual bill—an estimate that can swing widely depending on local levies, assessment changes, and valuation rules.
But the even more telling argument is less about the typical bill and more about what the tax consumes relative to the state’s capacity to pay.
Research from the Common Sense Institute frames the burden as a share of personal income and finds that property taxes consume about 3.25% of Iowa’s personal income, compared with 2.59% for the average U.S. state.
But what makes reform hard in Iowa is the same thing that makes property tax reform everywhere a thorny, difficult question: Property tax revenue is the financial backbone of local government.
Schools, cities, counties, and special districts rely on them to keep services running. And already, the governor is warning that reducing property taxes could lead to service cuts.
Iowans should not expect the “level of government that we have and expect the property taxes to go lower,” Reynolds said in May, according to the Iowa Capital Dispatch.
And she’s not wrong: 85% of Iowa’s local tax revenue comes from property taxes, slightly higher than the national average, according to the research from CSI. So any attempt to cut or cap those revenues becomes a public services question as much as a tax one.
That’s what makes Iowa’s debate so high-stakes. For taxpayers, the pressure is real. For lawmakers, the math is tricky. And for local governments, the outcome could reshape what they’re able to deliver to residents.