After property tax ‘whack-a-mole,’ Iowa lawmakers look for tax relief

Iowa legislative leaders say they’re ready to take another go at overhauling the state’s property tax system in 2026 — after failing to deliver tax cuts this year.

As was the case heading into the 2025 legislative session, agenda-setting Republicans who hold the majority in both chambers said rebooting Iowa’s property tax system remains their top priority in 2026. Their remarks came during a legislative forum on Wednesday, Dec. 3, in Urbandale hosted by the Greater Des Moines Partnership.

Top GOP tax policy lawmakers held multiple hearings on property tax bills in the 2025 session, but legislation ultimately failed to reach a floor vote in either chamber.

They explored reshaping the property tax system by shifting school funding to the state’s general fund and eliminating the decades-old “rollback” mechanism while giving homeowners a greater tax exemption on the value of their home.

Lawmakers will see new energy around the issue as Gov. Kim Reynolds has traversed the state to hold roundtable conversations focused on property taxes with local officials, state legislators and property tax payers. She is preparing to unveil her proposal in her final legislative session as governor.

More: Kim Reynolds says ‘everything is on the table’ as lawmakers revisit property tax overhaul

Rep. Gary Mohr, R-Bettendorf, chair of the House Appropriations Committee, said lawmakers will carry lessons learned from their efforts to draft legislation in the 2025 session into 2026. The legislative session starts Jan. 12.

“What we learned last year is it’s a whack-a-mole game, which we didn’t all know — meaning if you do this with property taxes, it has an effect over here that we didn’t think about,” Mohr said. “And if you do this with property taxes, it has an effect over here, which we didn’t think about. So that was the benefit last year of having this discussion.”

Senate Majority Leader Mike Klimesh, R-Spillville, said lawmakers have “slapped Band-Aids” on Iowa’s 40-year-old property tax system to rectify its issues.

“This session, property taxes will be front and center,” Klimesh said. “As I traveled across the state in the last couple months in my new role, property taxes are on everybody’s mind, right? Property taxes, I think, lead to the questions of housing affordability, leads to the questions of development for rural Iowa.”

He said lawmakers have to consider the complicated nature of the system to understand the ramifications of changing any one part of it. Klimesh anticipated cooperation between the Senate, House and governor’s office to push forward legislation in 2026.

“While we look at restructuring property taxes, I think it’s also going to be really important for us to realize that, to an extent, we squeeze a balloon,” Klimesh said. “We want our communities to be able to provide services because services also provide quality of life, and that’s what attracts you to live in a certain area.”

House Minority Leader Brian Meyer, D-Des Moines, said House Democrats would put forward their own “bold proposal” focused on residential property. He didn’t share details, but the caucus in the 2025 session pitched a $1,000 property tax rebate paid to all Iowa homeowners and a $500 rebate to all renters.

“We need to focus on property tax relief and backfill at the state level here and not harm the local governments,” Meyer said.

While Reynolds has said she’s “looking at everything” in her property tax legislation, she has appeared to rule out backfilling local funds municipalities may lose as a result of property tax cuts with state dollars.

“We can’t shift it to the state,” she told reporters Nov. 23. “That’s not property tax relief. I can’t come in and backfill for a lot of the things that we’re trying to do. So it has to be sustainable.”

Senate Minority Leader Janice Weiner, D-Iowa City, said property tax relief has to be directed toward middle-class residents and Iowans on a fixed income. She also said the system should be simplified so people better understand it.

“We have to make sure that local government can still do its job, that we can still have public safety and fund the amenities that make these communities a place people want to come and live and grow their families,” Weiner said.

Will lawmakers change economic development tools such as TIF?

Legislative leaders showed little interest in tinkering with other economic development tools such as tax increment financing. But the possibility of restricting TIF use frequently bubbles up at the Capitol and could again in 2026.

Local governments use TIF as a way to encourage developers to build in certain areas by funneling property taxes on increased property values resulting from a development toward public improvements in a district, such as infrastructure.

Weiner and Meyer said lawmakers shouldn’t mess with TIF, which they see as a valuable tool for local governments to spur development.

Mohr said he didn’t think House Republicans would touch TIF. He said rapidly growing communities like his own rely on it to lure businesses.

“Without it, we just simply couldn’t do projects,” Mohr said.

Marissa Payne covers the Iowa Statehouse and politics for the Des Moines Register. Reach her by email at [email protected].

This article originally appeared on Des Moines Register: After property tax ‘whack-a-mole,’ Iowa lawmakers to try again in 2026