Next up for Iowa lawmakers: property tax relief, eminent domain debate

DES MOINES — With the first few weeks of the 2026 Iowa legislative session done, state lawmakers now will turn to proposals that survived their first deadline — and their vows to also tackle property taxes.

Last week marked the first deadline since this year’s session began Jan. 12. To move forward for consideration, bills had to pass a committee in either chamber. Bills that made it past the funnel deadline include those about landowner rights to make way for carbon dioxide pipelines and efforts to slow Iowa’s rising cancer rates.

Of course, legislative leaders have procedural tools to still resurrect a bill that didn’t get initial support. And the deadline does not apply to bills on tax policy or budget bills, which can be considered at any time.

Taking on property taxes

Although Republicans control both chambers of the Legislature and the governor’s office, the House and Senate and Gov. Kim Reynolds each are coming to the negotiating table with their own proposals for property tax reform.

The House Republican plan emphasizes predictability and near-term relief, capping local property tax revenue growth at 2 percent plus the value of new construction, ensuring that cities and counties are still incentivized to grow. The cap includes exceptions for schools and the debt levy.

Reynolds’ proposal also includes a 2 percent cap on local revenue growth — with exceptions for debt service and school funding — but layers in a series of changes aimed at reshaping how local government operates.

Senate Republicans have taken a more technical approach, pitching a gradual overhaul of Iowa’s property tax system. Their plan would phase out Iowa’s decades-old property tax rollback mechanism and replace it with a large homestead exemption — 50 percent of a primary residence’s value, up to $350,000.

House Speaker Pat Grassley, a Republican from New Hartford, said he is having good conversations with the governor and Senate Republican leaders, noting progress is being made despite the perceived silence on the issue over the past few weeks.

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“It still seems very clear to me that there is a want from all three parties to get something done,” Grassley told reporters Thursday at the Iowa Capitol. “From my standpoint, I think that's positive.”

Senate Majority Leader Mike Klimesh, a Republican from Spillville, said he is approaching the process as a former mayor and plans to avoid “unnecessarily squeezing a balloon” when it comes to funding for local services.

“The fact that it's so complicated to arrive at a position where we can start sitting around a table and taking pieces from everybody's bill really kind of puts an exclamation point on why we should be doing this,” Klimesh told reporters.

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Lawmakers have said one of the top concerns they have heard from Iowans is about rising property tax bills. Last year, a House-Senate proposal offered what it supporters said was a $426 million savings over five years. The proposal underwent several revisions, but no agreement had been reached by the time the session ended in 2025.

Competing eminent domain proposals

House and Senate Republicans returned in the first week of the session to the debate on the use of eminent domain for hazardous liquid pipelines. Now, lawmakers in both chambers are considering competing policies.

Ames-based Summit Carbon Solutions has proposed a pipeline crossing five states including Iowa that would collect carbon dioxide emissions from ethanol plants and sequester them deep in the ground in North Dakota. Backers say that sequestering the greenhouse gas would open up the ethanol market.

But the proposal has raised the question of using eminent domain to site the pipeline route — forcing an easement on an unwilling landowner, with compensation. South Dakota has outlawed the use of eminent domain for CO2 pipelines. Although the Iowa Utilities Commission has allowed it for Summit, regulators said construction could not begin until all states have issued permits — and South Dakota has not.

With the proposed pipeline route in limbo, a bill in the Iowa House would prohibit the use of eminent domain for hazardous liquid pipelines. A bill in the Senate would allow hazardous liquid pipeline companies to amend planned and approved routes to enter into voluntary easements with landowners, and avoid using eminent domain. Another proposal in the Senate would tax liquefied CO2 transported through pipelines in Iowa per metric ton.

Klimesh, who took the reins on the issue in his chamber, said he had “good” conversations with House leaders and the governor's office last week regarding eminent domain, adding they are ongoing.

“We need to talk to each other, right? And that's what it takes,” Klimesh told reporters. “Sometimes it takes time to have those conversations. A forced conversation, in my opinion, doesn't usually yield the best fruit.”

Reynolds has yet to weigh in on the debate this session after she vetoed eminent domain-related legislation passed by the House and Senate last year, saying it was “too broad.”

In January, Reynolds told reporters at Great Oaks High School and Career Center in Des Moines that she was having conversations with Republican leaders in both chambers on the issue of eminent domain, adding that they want to find a resolution.

Addressing cancer rates

Although there is no specific legislative agenda aimed at addressing the issue, Iowa’s rising cancer rates are a prominent topic of discussion at the Capitol.

During her Condition of the State address in January, Reynolds announced the state would use recent federal funding to go toward cancer care, research and mitigation.

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In early February, she announced a proposal to increase the sales tax on cigarettes and other tobacco products, raising the overall tax on a pack of 20 cigarettes by 65 cents.

The legislation follows an annual report conducted by the University of Iowa’s College of Public Health that showed Iowa continues to have the second-highest cancer rate in the United States, behind Kentucky, and is the only state with a rising rate. Rates of lung cancer are particularly high, according to the report’s preliminary data.

Reynolds’ proposed tax increase was considered by Senate lawmakers, but failed to receive enough support in full committee.

Her proposal was also included in a large health-related bill in the House, but was amended out of the legislation during a House Health and Human Services Committee meeting last week.

A bill sponsored by Republican Rep. Brett Barker, of Nevada, in the House would increase the cigarette tax from $1.50 per pack to $2.86 per pack. Since the legislation relates to tax policy, it is immune to the funnel deadlines in the Legislature.

Grassley told reporters Thursday that the House Republican caucus does not have a “landing spot” yet on the legislation.

“The future has a level of uncertainty, and I only state that from the standpoint of we really have not fully dove into our Ways and Means conversations and our taxing conversations,” Grassley said.

Other bills intended to curb Iowa’s rising cancer rates have cleared last week’s hurdle. Legislation requiring parental consent for those under 18 to use a tanning bed advanced out of a full House committee, alongside a bill establishing radon mitigation requirements for new construction.

The next legislative funnel is March 20. That deadline requires bills to have passed out of one chamber and a subcommittee and full committee in the other chamber.

Erin Murphy and Tom Barton of The Gazette contributed to this report.