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Understanding the New Iowa Property Tax Legislation Part 1: Commercial Property Tax Roll-Back

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The Nyemaster Tax Law Blog is dedicated to current tax law and employee benefit/ERISA issues impacting individuals and businesses, at both the Iowa and federal levels. We hope you find this resource informative and appreciate your feedback.

By Bruce Baker, Dwayne Vande Krol, and Sarah Raaii

During the 2013 legislative session, the Iowa General Assembly passed landmark property tax reform that the Governor recently signed into law. This is the first in a series of articles analyzing the key sections of the legislation and what it means to Iowa property owners. In this post, we address the commercial property tax roll-back and its impact on commercial property owners.

Without any adjustments, inflation generally causes property market values to increase, thereby increasing property taxes. Division II of the new legislation seeks to ease that increase by rolling back the percent of commercial property value that is subject to tax. Commercial and industrial property will first be taxed at 95% of assessed value as of the January 1, 2013, assessment date, affecting taxes payable in 2014 and 2015. Commercial and industrial property will then be taxed at 90% of assessed value as of January 1, 2014, and thereafter.

The new law also immediately reduces the maximum annual taxable value growth percentage from 4% to 3% for residential and agricultural property. To help compensate for the loss in revenue, the state will appropriate money back to local governments.

While the reduction in the percentage of value that is subject to tax should provide some relief, Iowa property owners should continue to monitor their overall tax expense, as increases in the assessed value of the property and/or levy rates may counteract those savings. If you have any questions regarding the matters covered in this publication, please contact Bruce Baker or Dwayne Vande Krol or your regular Nyemaster Goode contact.


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