Iowa Senate Republicans Reveal their Plan to Lower Property Taxes

Without your donation, some stories vanish. Support Decorah News. Iowa Senate Republicans unveiled their property tax plan Monday as the 2026 session began, saying the state's system for collecting these local taxes must be rebuilt in order to lower costs for taxpayers. Sen. Dan Dawson, R-Council Bluffs, and Senate Majority Leader Mike Klimesh, R-Spillville, held a news conference Monday to discuss Senate Study Bill 3001, Senate Republicans' first legislative proposal of the year on how to change Iowa's property tax system. This proposal also involves changes to Iowa's "rollback" system, similar to legislation brought up in 2025, alongside other changes Dawson said present ways to address the specific problems and concerns Iowans have brought up with the state's property tax system. "What we provide today in the Senate is a vision," Dawson said. "And that vision is, that when valuation on your property — home — inflation goes up more than 2%, the rates automatically come down. It's a vision that, permanently going forward, every homestead Iowan has a 50% taxable discount on their home. It's a vision that we want good quality roads and bridges — we heard that loud and clear from our constituents over the interim. And finally, it's a vision that ultimately, when you pay off your home at a certain age of life, you have to be able to own your home." Dawson chairs the Senate Ways and Means Committee, which deals with tax legislation. Last year he and Rep. Bobby Kaufmann, his House counterpart who is now House majority leader, introduced legislation on Iowa's property tax system. They proposed eliminating the state's current system of calculating property taxes that limits taxation to a portion of a residential property's value, known as "rollback," in favor of a "revenue-restricted" system to limit levy rate growth. Though there were several versions of this proposal discussed, the measure failed to advance to a vote in either chamber. Dawson said "what you see here is actually really continuation of last year," with several components of the 103-page bill coming out of discussions in 2025 on how to effectively change the state's property tax system. As eliminating the rollback would mean property taxes are calculated based on the full value of a residential property, the bill contains measures to offset this cost. It increases Iowa's homestead tax credit to 50% of a home's taxable value and eliminates property taxes for older Iowa homeowners, in addition to setting limits on how much levy rates can increase each year. Dawson said compared to the 2025 proposal, this year's legislation will provide local governments new tools to address the expected loss of property tax revenues in their budgets. It allows city and county governments to seek voter approval to increase the local option sales tax, as well as adding an inflation index to the state's gas tax. Additionally, Dawson said the proposal will separate taxing systems for residential property owned by a homeowner living with their family in a property versus residential real estate being rented to others. "I mean, we're trying to propose a new taxation viewpoint here in the state, either you own property that your family lives in, or you own property for income, and those should be two entirely different taxing type of situations, right?" Dawson said. "What we find right now is that, you know, a normal household out there could be paying the same percentage of property tax — their taxable value because of the rollback — as to what's the big corporations do out there. And that doesn't make sense." Other tax proposals are likely Senate Republicans' proposal is unlikely to be the only plan considered on property taxes this year. Gov. Kim Reynolds has named property taxes as her top priority for her last term leading the state executive branch, and legislative leaders spoke Monday about their commitment to working to find ways to lower these costs for Iowans. The governor and lawmakers spent several months in 2025 holding meetings with local governments and community leaders to craft a policy. But Reynolds has said Iowans should understand reductions in property taxes will come with reductions in local government services — though she said she and other leaders are working to find areas where certain services can be streamlined or combined to more efficiently use taxpayer funds. The governor is expected to discuss property taxes alongside her other legislative priorities in her Condition of the State address Tuesday. In his opening remarks, House Speaker Pat Grassley said the property tax discussions from last year will help shape the measures moved forward in 2026. "Last session, we made good progress and got great feedback from Iowans and stakeholders on this issue," Grassley said. "But rather than rush just to say we got something done, we decided to return to the table this session. For too long, certainty for the taxing entities has taken priority over certainty for the taxpayers. It's time to put the taxpayers first once again." Iowa House Democrats also introduced a plan to lower property taxes last week. Their proposal would freeze property taxes for people age 65 and older, triple the Homestead Tax Credit, limit annual property tax growth to 4% and provide state funding for public safety workers' retirement funds. House Minority Leader Brian Meyer said in his opening remarks the caucus proposal on property taxes was part of House Democrats' larger agenda to make life in Iowa more affordable. Meyer said Democrats' plan to reduce property taxes is "paid for by cutting wasteful state spending." He also said lawmakers must address other spending and budget issues in 2026 to avoid a deficit. In 2025, the Legislature approved a budget above the state's expected revenue for the fiscal year, drawing at least $917 million from the state reserve funds, budget surplus and the Taxpayer Relief Fund. Some Republicans are looking for tax relief beyond property taxes. Senate Appropriations Committee Chairman Tim Kraayenbrink, R-Fort Dodge, said Monday in the committee's first meeting that he is hoping to mirror some federal tax cuts enacted last year in the One Big Beautiful Bill Act. He specifically cited the federal actions eliminating income taxes on tips, overtime and Social Security. "So … hopefully we will be following suit with (the) federal government on that, giving some of the hardworking Iowans their money back, those that had to work overtime to make things work, or those that had to waitress … in a diner or a place of food service. It's just nice to be able to give some of that money back to the people of Iowa," Kraayenbrink said. While property taxes are a top priority for legislative leaders, the breadth of tax policy discussed at the Iowa Capitol may be more limited in 2026 compared to other years. As the Senate Appropriations Committee met Monday, Dawson said he intended to complete the panel's work in just five more meetings after Monday in the interest of keeping members' work "focused and with a purpose." "I'm going to try to make the commitment right now, see if I can keep it, setting aside this meeting, we're going to lay the gauntlet down: Five meetings," he said. "So we're gonna see if we can get our work done in five meetings this year. They might all occur on the last week, but that's what we're gonna try to do." — Kathie Obradovich contributed to this report. Discover what's happening near you! The free DecorahNews.com newsletter brings updates, inspiring stories, and practical tips right to your inbox.