On January 12, 2026, the Iowa Legislature gaveled into session, and by the end of the first week, property tax reform proposals were already dominating the policy agenda. Prior to the start of the session, Governor Kim Reynolds and legislative leaders both stated that property tax reform would be the top priority.
Governor Kim Reynolds, in her Condition of the State Address, along with legislative leaders in both the Iowa House and Senate, made property tax reform a priority in their opening-day remarks. Iowa Senate Majority Leader Mike Klimesh stated that “over the next 100 days we will be addressing property tax reform to help bring relief to Iowans who have decided to build their lives, grow their families, and dedicate their careers to our state.”
“For years, Iowans have been looking for help, for relief when it comes to property taxes,” noted Leader Klimesh. Further, he argued that “to provide real, lasting relief requires major reform that tackles our system and helps make it simple and workable for Iowans and their families.”
On the first day of the session, Leader Klimesh announced that Senate Republicans would be introducing their property tax reform proposal. He described the Senate plan as a “proposal to bring real property tax reform to a complicated and antiquated system—or, as I have said over the last several weeks, strip the old, broken system down to its chassis and rebuild it.”
Iowa Senate President Amy Sinclair noted that lawmakers must “get a handle on our property tax system so that local government growth does not continue to outpace the salaries of the people paying the bills.”
Speaker of the House Pat Grassley described property tax reform as one of the “chief” policy goals and stated that “Iowans have made it known that the current property tax system is not working for them.” “For too long, certainty for the taxing entities has taken priority over certainty for the taxpayers. It’s time to put the taxpayers first,” said Speaker Grassley.
In her Condition of the State message, Governor Reynolds outlined a comprehensive property tax reform measure. “The rate at which property taxes are rising is unacceptable, and Iowans expect legislation that delivers meaningful relief to be passed this year,” she stated.
“Property taxes are rising faster than inflation, faster than paychecks, and faster than population growth. In fact, over the last two years, they’ve gone up more than 10 percent. And that’s not acceptable,” Governor Reynolds argued.
The increase in property taxes is not just a recent problem. Over the past 20 years, property taxes have increased by more than 107 percent. In fiscal year 2026, local governments will collect over $6 billion in property taxes from taxpayers.
Governor Reynolds stated that high property taxes are impacting Iowans in every community and income level, whether rural or urban. Further, tax bills are growing faster than many taxpayers’ ability to pay.
Leader Klimesh correctly noted that property tax reform and lowering the tax burden are necessary to help make Iowa’s economy even more competitive. “One of the most important things I have heard for Iowa’s future is the number of people out there who want to start their businesses and build their ideas, and they are looking for the right place to do it,” he said.
Further, he argued that his objective is to ensure that Iowa is the “home they choose for growth and investment.” “Encouraging an environment in Iowa where government gets out of the way so innovation can thrive has effects that could be felt across every area of our state. It brings more careers to Iowa, more investment in our communities, more people who want to live and work here with their families, more students in our schools—more opportunities for Iowans,” Leader Klimesh stated.
Governor Reynolds echoed Leader Klimesh by stating that not only do tax rates matter, but they have a significant impact on individuals, families, and businesses. “When I first took office in 2017, Iowa’s top income tax rate was 8.98 percent, among the nation’s highest. So was our 12 percent corporate tax rate,” she said. “Those taxes weren’t just numbers on a page. They were eating into paychecks, increasing the cost of doing business, and quietly making life more expensive for Iowa families.”
With the 3.8 percent flat income tax and other tax reforms, Governor Reynolds reminded legislators and Iowans that this is “more than just a number, a ranking, or a percentage.” “It means more room in the budget for groceries. For school supplies. For a tank of gas. It means saving more, instead of falling a little further behind,” she noted.
“Yet for all the progress we’ve made,” Governor Reynolds stated in reference to previous tax reforms, “Iowans and the economy are still being impacted by high property taxes.”
This includes rural Iowa as well. Governor Reynolds acknowledged that high property taxes are hindering economic growth and forcing people to leave rural communities. “As we’re seeing property taxes escalating, people are leaving rural Iowa because they can’t afford to stay,” she said. “That’s part of the equation, too. We need to grow the population in rural Iowa.”
Governor Reynolds defined both the cause of Iowa’s property tax problem and the solution. “So this year, we need to go after the real driver of the problem: spending. Spending is what drives taxes—always has, always will. And the most reliable way to protect taxpayers is to limit the growth of government itself,” she stated.
For that reason, the starting point for any sound tax policy discussion must be spending restraint. The property tax reform proposals discussed by Governor Reynolds, Senate Republicans, and House Republicans are all significant, comprehensive reform measures. Most importantly, they all contain a 2 percent property tax cap to slow the growth of local government spending.
Below is a side-by-side summary of the key components of each proposal as they were originally introduced.
The main provisions of Governor Reynolds’ proposal include the following reforms:
The Senate proposal, which is a continuation and revised version of Senate Ways & Means Committee Chair Dan Dawson’s 2025 reform measure, contains numerous reforms. The most significant include:
In addition, the Senate plan seeks to provide greater revenue flexibility for cities and counties by providing them with the option for increasing the local option sales tax to replace lost property tax revenue. It also addresses what they consider to be greater infrastructure needs that will be solved by indexing the gas tax to inflation.
“It will bring relief to Iowans facing rising costs and help restore Iowa’s aging roads and bridges. Perhaps most importantly, this proposal builds on the idea that once you pay off your home, it is truly yours,” argues Leader Klimesh in summarizing the Senate plan.
Perhaps the most headling-grabbing aspect of all the plans is the various approaches to granting senior citizens a property tax freeze or an outright exemption. The concern with this policy is not to dismiss those seniors who are struggling with high property tax burdens, but rather potential unintended consequences.
Granting a property tax freeze or complete exemption for one group of taxpayers will result in shifting the burden to other taxpayers. Seniors will benefit, but individuals, families, and small businesses will have to carry more of the tax burden. A freeze may benefit a struggling senior who is living on Social Security, but what about the family living paycheck to paycheck or the young college graduate trying to save for a home, which may or may not come?
Finally, what will the impact be on small businesses? Should they pay a higher property tax burden to subsidize seniors? How will that help Iowa’s economy and economic competitiveness?
In discussing the legislative process for property tax reform moving forward, Speaker Grassley noted that “making sure that there’s not any unforeseen shifts that may happen with some of the changes” is an important precaution. “Whatever the comes of this conversation our ultimate goal is to make sure that it is providing certainty for relief, not at the back of just shifting any sort of burden to one taxpayer or another,” stated Speaker Grassley on Iowa Press.
Although these property tax reform proposals contain numerous provisions, Governor Reynolds is correct that the focus must be on spending, and that “the most reliable way to protect taxpayers is to limit local spending.”
This is why it is imperative that the final property tax reform measure contains a strong property tax cap that does not have any loopholes or carveouts. One reason past property tax reform measures have failed is that they have not addressed local government spending.
It appears likely that a consensus has emerged on the importance of capping property tax collections. Iowa House Democrats have even proposed a 4% property tax cap. However, the details will be important on how effective the cap will be in limiting spending.
Already, even before the ink was dry on the bills being printed, local governments and media outlets were sounding the all too familiar alarms that a 2% cap will devastate city and county budgets.
Localities are arguing that a 2% property tax cut is a draconian spending limitation, which will result in the reduction of vital services. The Des Moines Register’s editorial even went so far to argue that a 2% cap would result in catastrophe with an outbreak of potholes in roads and sewage backing up into basements.
“Hanging on to a few hundred dollars won’t mean much to Iowans if it also means they’re less safe or more susceptible to blowing a tire in a pothole or seeing sewage back up in their basements,” argued the Register’s editorial.
It is only in government that slowing the increase in government spending is viewed as a cut, and there are probably many Iowans who would enjoy having a guaranteed 2% increase to their income. Contrary to the Register, many Iowans probably would enjoy “hanging on to a few hundred dollars” resulting from property tax savings. Perhaps some might even subscribe if they had extra dollars to spend.
In responding to a question about a 2% property tax cap and the difficulties it might cause cities and counties, Speaker Grassley stated:
We understand that there has to be some level of service at the local level. And I think part of what’s going to come from this, hopefully, is a different way of delivering of services, more efficient way of delivering services, but making sure that ultimately, we provide that certainty for the taxpayer. Yes, we recognize that we still have to have those essential services at the local level, but for too long, we’ve entered into this conversation without sitting in the taxpayers seat and answering our questions from that standpoint.
Governor Reynolds reminded The Des Moines Register that her 2% cap is not a negative, because it allows for new construction. In addition, in defending the taxpayer she stated, “Ask families. Do they get a guaranteed income increase?”
Prior to the start of the legislative session, Governor Reynolds repeatedly has urged local governments to start looking at ways to reform government through efficiencies and shared services. She urges them to follow the example of her state government reform and realignment efforts over the past few years.
“If Iowans want lower property taxes, we must also change how local government works—and who we elect to run it,” stated Governor Reynolds. She also argues that local governments will have to make priorities when it comes to budgeting.
“When you have a set amount of dollars in revenue that you have to operate with, then you have to prioritize what’s important,” noted Governor Reynolds. “How can I do things differently that would save dollars that I could put into essential services? I would assume [that] would be the priority, and so how do we fund those first?”
Governor Reynolds is correct that for property tax reform to be successful it must limit local government spending. Let’s hope the final property bill applies the Schultz Rule, which should be applied to all fiscal policy. Iowa Senator Jason Schultz has offered a rule that should guide every serious conversation about tax reform: “Tax policy is affected by spending. And when you start seeing spending creeping up… you can’t have good tax policy.”
Good policy starts and ends with conservative budgeting and spending restraint. “It’s not enough just to cut taxes. You have to make them sustainable… The growth they create helps, but you also have to keep spending in check,” according to Governor Reynolds.
Speaker Grassley is also correct that for too long the taxpayer has been left on the sidelines, and it is time that they are the focus of reform. With only two weeks into the session, it appears that the voice of Iowa taxpayers has reached the legislature as three substantial property tax reform proposals take center stage.
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