Iowa seniors, veterans can apply for new property tax break. Here’s how.

Iowa seniors and veterans can begin applying for a new property tax break created by legislation signed into law earlier this month by Gov. Kim Reynolds.

The new property tax law, House File 718, was approved with near-unanimous support in the Iowa Legislature. The bill is designed to limit the amount of new property tax revenue growth that local governments can use in their budgets.

Republican legislative leaders estimate the legislation will result in a $100 million property tax cut statewide.

⧉ Related article: Iowa governor signs property tax constraints into law

What does the new property tax law do?

The new law limits growth of property tax on individual residential and agricultural properties to 3 percent annually.

Under the new law, when property assessments increase between 3 percent and 6 percent, the tax levy growth is limited to 2 percent. When assessments increase 6 percent or more, the levy growth is limited to 3 percent.

Those provisions will be in effect for four years, after which state lawmakers will need to determine whether to continue with the structure or change it.

It also provides new property tax exemptions for Iowans age 65 and older and increases an existing tax exemption for military veterans.

What do the tax breaks provide and how do they work?

The law provides a $3,250 exemption on the taxable value of a home owned and lived in by Iowans age 65 and older. The exemption applies for the assessment that began Jan. 1 that would have associated taxes due in fall 2024 and spring 2025. The homestead property tax exemption increases to $6,500 for the 2024 assessment year.

The exemption is a reduction in the taxable value of the property — not a direct reduction in the amount of property taxes owed.

The new law also more than doubles an existing property tax exemption for veterans. It increases the military service tax exemption to $4,000 in taxable value from the current $1,852 in taxable value, starting with the current assessment year that began Jan. 1.

How can Iowan seniors apply for the property tax exemption?

The Iowa Department of Revenue announced Monday it has amended the homestead tax credit exemption form to allow seniors to apply for the new exemption.

Applications are due July 1 to local assessor offices.

Forms turned in after July 1 of the year in which the credit or exemption is claimed will count as a claim for the following year.

Iowans can find the application at tax.iowa.gov/forms under the form Homestead Tax Credit and Exemption 54-028. The form is also available at the bottom of this story.

To claim the new exemption, applicants must provide their date of birth and certify that the information on the form is correct.

A qualified claimant receiving the homestead credit must be 65 or older on or before Jan. 1 of each assessment year to receive the exemption.

How can Iowa veterans apply for the military service property tax exemption?

The exemption is available to "an honorably separated, retired, furloughed to a reserve, placed on inactive status or discharged veteran."

However, military veterans currently receiving the exemption do not need to file a new application as long as the veteran or the veteran's spouse is the legal or equitable owner of the property on July 1 for which the exemption is allowed, said John Fuller, a spokesperson for the Iowa Department of Revenue.

If not currently receiving the military service tax exemption, as with seniors, applications are due July 1 to the local assessor.

The application can be found at tax.iowa.gov/forms under Military Service Property Tax Exemption 54-146. The form is also available at the bottom of this story.

Can I still claim the homestead tax credit?

Yes.

Current law already exempts the first $4,850 of a qualifying home from property taxes through the homestead tax credit.

Beginning with the 2023 assessment year, Iowans age 65 years or older may claim a homestead tax exemption in addition to the homestead credit.

But, unlike the current tax credit, local governments will not be reimbursed for the loss in revenue from this part of the new law.

Do I need to reapply for the tax exemption?

No.

If granted, the exemption will be allowed for future years without future filing as long as the claimant continues to qualify, according to the Iowa Department of Revenue.

Iowans who already receive a homestead tax credit — but are not eligible for the new exemption for seniors — do not need to reapply for their credit.

HomesteadTaxCreditAndExemption(54028) (1) by Gazetteonline on Scribd

MilitaryServicePropertyTax(54146) (1) by Gazetteonline on Scribd

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