Iowa seniors, veterans can begin applying for new property tax break

May 16--Iowa seniors and veterans can begin applying for a new property tax break created by legislation signed into law earlier this month by Gov. Kim Reynolds.

The new property tax law, House File 718, was approved with near-unanimous support in the Iowa Legislature. The bill is designed to limit the amount of new property tax revenue growth that local governments can use in their budgets.

Republican legislative leaders estimate the legislation will result in a $100 million property tax cut statewide.

Related article: Iowa cities scrambling to understand impacts of new property tax law

It also provides new property tax exemptions for Iowans age 65 and older and for military veterans.

The law provides a $3,250 exemption on the taxable value of a home owned and lived in by Iowans 65 and older as of Jan. 1 of this year. The exemption applies for the 2023 assessment year that would have associated taxes due in fall 2024 and spring 2025. The homestead property tax exemption increases to $6,500 for the 2024 assessment year. The exemption is a reduction in the taxable value of the property -- not a direct reduction in the amount of property taxes owed.

And it is in addition to the Iowa Homestead Tax Credit, which reduces the taxable value of an owner-occupied Iowa home up to $4,850. Persons in the military or in nursing homes who do not occupy the home are also eligible.

The Iowa Department of Revenue announced Monday it has amended the homestead tax credit exemption form to allow seniors to apply for the new exemption. Applications are due July 1 to local assessor offices.

If granted, the exemption will be allowed for future years without future filing as long as the claimant continues to qualify, according to the department.

Unlike the Iowa Homestead Tax Credit, however, local governments will not be "backfilled" for the loss in revenue from this part of the new law.

The new law also more than doubles a property tax exemption for veterans by increasing it to $4,000 in taxable value from the current $1,852 in taxable value.

As with seniors, applications are due July 1 to the local assessor. However, military veterans currently receiving the exemption do not need to file a new application as long as the veteran or the veteran's spouse is the legal or equitable owner of the property on July 1 for which the exemption is allowed, said John Fuller, a spokesperson for the Iowa Department of Revenue.

The exemption applies for a honorably separated, retired, furloughed to a reserve, placed on inactive status or discharged veteran.

Lawmakers passed the bill shortly after the latest round of property assessments across Iowa showed widespread, dramatic increases in the assessed value of homes -- up a statewide average of 22 percent this year -- to keep the rise from triggering dramatic increases in homeowners' local property tax bills.

While calling the bill the most significant property tax reform in state history, Reynolds and Republican lawmakers have said the measure is just the first step in addressing property taxes, and intend to revisit the issue during next year's legislative session.

Comments: (319) 398-8499; tom.barton@thegazette.com

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