Iowa House Democrats roll out property tax proposal, including 4% annual property tax cap

DES MOINES — Ahead of the 2026 legislative session, Iowa House Democrats rolled out a property tax relief plan Monday that includes a 4 percent property tax cap, rebates for homeowners and renters, and a property tax freeze for seniors.

The party’s plan comes as property taxes are expected to be a key focal point of this year’s session, starting Jan. 12. GOP leaders in both chambers and Gov. Kim Reynolds have said they also will put forth plans to address the issue.

The proposal released by House Democrats is the first to emerge. It includes tripling the Homestead Tax Credit, instituting an annual 4 percent property tax growth cap, freezing property taxes for Iowans 65 and older, and more state support for public safety workers’ retirement funds.

It also includes a $1,000 rebate for homeowners and a $500 rebate for renters for two years before the 4 percent cap is implemented — a similar component of the House Democrats’ plan in 2025, which didn’t advance in the Republican controlled legislature.

Democratic state Rep. Dave Jacoby of Coralville, who is spearheading his caucus’ proposal, said the plan aims to be “effective” and provide immediate relief to Iowans.

“The House Democrat property flat tax proposal offers certainty,” Jacoby told reporters during a press conference at the Iowa State Capitol. “This is a certainty that we have not seen in years. Certainty for homeowners, certainty for renters, certainty for our schools, cities and counties. It also offers our aging population the opportunity to stay in their homes and to stay in Iowa.”

While holding property tax roundtables across Iowa over the summer and fall, Reynolds floated the idea of enhancing shared service models between local governments, which rely on property taxes to fund many of their operations, to increase efficiency and reduce redundancy. She is expected to share her proposal during the annual Condition of the State address on Jan. 13, when she lays out her legislative priorities for the session.

Jacoby said it's important to review which service sharing is possible between local governments and counties, but added the plan’s 4 percent annual cap on property tax growth would provide both relief for taxpayers and certainty for local governments. Jacoby offered the example of a person who owes $1,000 in property taxes one year. The next year, their bill could not be more than $1,040.

Before the cap would be implemented, Jacoby said rebates would provide immediate relief for homeowners and renters. The rebates would be funded through the Iowa Taxpayer Relief Fund, a state account comprised of unspent state general fund revenue, designated to provide relief to Iowans, according to Jacoby.

The party still is waiting on a cost estimate from the nonpartisan Legislative Services Agency.

To ensure that public safety workers would maintain full retirement benefits, Jacoby said the state would cover city and county contribution costs for the Iowa Public Employees' Retirement System (IPERS) and 411 system — a retirement system for firefighters and police officers employed by cities — under the proposal.

The plan also would increase Homestead Tax Credits, which are available to Iowans who own and occupy their home for at least six months of the calendar year. The tax credits currently sit between $200 and $300, but would increase to between $500 and $600 under House Democrats’ plan.

Another component of the plan is a property tax freeze for seniors, a plan also floated by Reynolds, that would help keep seniors in their homes after retirement, according to Jacoby. He said the Iowa League of Cities is currently estimating how much the freeze would cost.

“Many seniors would like to stay in their home,” Jacoby told reporters. “Many people would like to move but they can't afford the property tax liability. If they move up this way, it offers certainty that we will also open up the housing stock in Iowa.”

Jacoby said he hopes to see bipartisan conversations around tax relief this session, adding that he has a good working relationship with House Majority Leader Bobby Kaufmann, with whom he served on the House Ways and Means Committee.

Iowa Senate Democrats are not planning to bring their own proposal during the legislative session. Instead, they will be "vetting" any proposal brought by Republicans in the chamber, Senate Minority Leader Janice Weiner of Iowa City told the Gazette-Lee Des Moines Bureau in December.