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Public Policy Update: Major Property Tax Reform Bill Introduced

March 14, 2025 | Public Policy

State Policy Update

The first funnel deadline of the 2025 session was last Friday. Following this deadline, hundreds of bills did not survive, making them ineligible to advance, with certain exceptions such as tax and appropriation bills. An update on the bills the Economic Alliance is closely monitoring related to our 2025priorities, include the following:  

Incentivize Business Growth  

• As anticipated, Ways & Means Chairmen Dan Dawson and Bobby Kaufmann have filed companion bills (HSB 313/SSB 1208) that overhaul Iowa’s property tax system. If enacted, the legislation will do the following:
• Phase out the state’s “rollback” for residential and commercial properties by 2030.
• Cap most property tax levy growth to 2% each year, excluding revenue from new construction.
• Use state general funds to provide $426 million in school funding currently paid for with property taxes.
• Give each household a $25,000 homestead property tax exemption.
• Raise an existing veterans property tax exemption $3,000 to $7,000.
• Provide a property tax credit to Iowans at least 70 years old who make less than 350% of the federal poverty level.

Status: Both chairs have indicated there won’t be a subcommittee held until at least two weeks have passed as they are collecting feedback from all stakeholders. Contact Barbra Solberg if you want to provide feedback. 

• The Iowa Economic Development Authority’s (IEDA) tax credit reform bill significantly restructures tax credit incentives by consolidating and/or eliminating some existing incentive programs and creating new programs. This is an effort by the state to encourage startup investments and promote high-wage industries like manufacturing, biosciences and technology. Status: Awaits Committee Action

• A bill to further reform Iowa’s unemployment insurance program continues to make its way through the legislature. A priority of the Governor, the proposal would lower the maximum benefit tax rate to 5.4%, the lowest allowed by federal law, and cut the taxable wage base by half. It also reduces the number of tax tables. Status: Awaits Action in Senate Ways & Means Committee and House Labor & Workforce Committee.

Invest in Talent Development 

• The Governor’s Health Care System Reform billaims to recruit and retain medical providers by creating a “hub-and-spoke” partnership funding model to enhance Iowa’s rural health system. Additionally, a health care professional incentive program is created to provide financial awards to eligible health care professionals working in underserved areas. Status: Passed House and Senate Health & Human Services Subcommittee; Awaits Action in Appropriations Committees of both Chambers

• The Improving Workforce Development Initiates bill aims to enhance the efficiency and effectiveness of workforce development initiatives in Iowa to create a more skilled workforce. Status: Passed Senate 48-0 on 3/12; Awaits Floor Action in House

• The Iowa New Resident and Graduate Tax Credit Act introduces two tax credits: one for new residents who have recently taken full-time employment in Iowa and another for recent graduates from Iowa-based educational institutions. Each credit allows eligible individuals to reduce their income tax liability by 100% for up to four consecutive tax years. Status: Awaits Action in House Ways & Means Committee

• The Career Education Enhancement Act aims to connect students with local career opportunities and enhance their readiness for the workforce. It mandates the Iowa Department of Education to create a list of industry-recognized credentials for high school students, which will be aligned with career and technical education service areas. Additionally, the bill modifies the curriculum for grades five through eight to include career planning and pathways. Status: Passed House 61-28 on 3/10; Awaits Action in Senate

Remove Barriers to Expand our Workforce  

• The Governor’s child care proposalcontinues to move forward. The proposal would launch a $16 million program to provide three-year grants of up to $100,000 to preschool providers and child care providers to provide wraparound transportation services for working parents. Status: Passed House Health & Human Services Committee, Passed Senate Education Committee; Awaits Floor Action in both Chambers

Enhance Community Attraction & Livability Efforts 

• A workforce housing tax incentivebill proposes to raise the cap from $35 million to $50 million, and aims to improve housing availability and affordability in the state. Status: Awaits Action in both Chamber’s Ways & Means Committees

• Another housing bill removes the current $7 million annual cap on the amount of Real Estate Transfer Tax funds that can be transferred to the Housing Trust Fund allowing for more attainable housing development. Status: Awaits Action in both Chamber’s Ways & Means Committee

• The Midwest Interstate Passenger Rail Compactcontinues to see bipartisan support to promote passenger rail travel in midwestern states, including Iowa. Status: Passed House 95-1 on 3/12; Awaits Action in the Senate

The Revenue Estimating Conference (REC), a non-partisan committee whose purpose is to periodically provide state revenue estimates, met this week to provide legislator with the most recent Fiscal Year 2026 estimate and set the stage for budget work to begin. The second funnel deadline of the session is on April 4th and the scheduled end of session on May 2nd.

Common Sense Institute Iowa Update

CSI Iowa board member and Economic Alliance Executive Director Doug Neumann was honored earlier this week at CSI’s Free Enterprise Summit with the “Champion of Prosperity” award. In his acceptance remarks, Doug shared his reasons for actively supporting the Common Sense Institute and its mission. 

“Civility matters. Tough debates about crucial public policy matter. When we listen to different perspectives and when we allow facts and data to drive our reasoning, we all wind up with a better understanding of the risks and rewards, of the consequences and the opportunities. Society suffers when we put ourselves in echo chambers and have one-way debates. Or no debates at all. Too often today, people are reflexively for or against something because of who said it or which party proposed it instead of listening to what is actually being proposed. How do we overcome this dangerous trend in political discourse? Well, facts are a pretty darn good place to start a conversation about solutions. If you haven’t already, I urge you to spend some time digesting the reports Common Sense Institute is generating. It’s strong work.”  The Economic Alliance remains committed to civil debate and discussions that lead to bipartisan outcomes that grow our economy and support our community needs. 

Federal Policy Update

With the rapid flow of action and information from Washington, D.C., the Economic Alliance remains committed to addressing key issues that impact businesses and our members. This week, we welcomed John Kirchner, Vice President of Government Affairs for the Midwest Region at the U.S. Chamber of Commerce, to provide an update on two federal issues we are actively collaborating on. 

• Taxes: Unless Congress takes action before the end of the year, taxes for both individuals and businesses will rise. To clarify, we are not advocating for tax cuts but rather urging that taxes not be increased at this time. If Congress does not extend the current provisions of the Tax Cuts & Jobs Act of 2017 before the year ends, all taxes will go up. Congress must pursue comprehensive, industry-neutral solutions for a pro-growth and globally competitive U.S. business tax system.
• Trade: According to the U.S. Trade Representative, 380,000 Iowa jobs depend on international trade, with the state exporting $27 billion in goods and services. Additionally, 66,700 Iowa workers are employed by foreign-headquartered companies. Iowa’s top trading partners include Canada, Mexico, and China. While some current trade policies need to be reformed, it’s important to recognize that tariffs function as a tax on businesses and consumers. Industries in the Cedar Rapids metro, and their employees, depend on global trade, and we continue working with our federal delegation to highlight the negative impact tariffs could have on our local economy.

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