For many homeowners and small businesses, the most stressful mail of the year isn’t a credit card bill — it’s the property tax statement. Across the country, property taxes have climbed steadily, often faster than incomes, leaving families wondering why meaningful relief seems so elusive.
Two states — Iowa and Texas — offer a useful window into both the scale of the problem and the policy debate over how to address it.
Over the past two decades, property tax collections in Iowa have increased by more than 107 percent, with local governments projected to collect over $6 billion in fiscal year 2026. In Texas, local governments now collect more than $80 billion in property taxes annually — roughly a 70 percent increase from 2015 to 2024, even as population growth plus inflation rose by about 50 percent. Though the states differ economically and demographically, the trend is similar: property tax bills have risen significantly faster than the underlying cost pressures many households face.
These increases carry real consequences. Property taxes must be paid regardless of fluctuations in income, which can place particular strain on retirees and families on fixed budgets. For businesses, the impact is especially pronounced. In Iowa, property taxes account for an estimated 40 percent of the local tax burden on businesses, and when all local taxes are considered, businesses shoulder roughly 56 percent of the total. In Texas, that share is even higher, approaching 62 percent. Those costs influence hiring decisions, expansion plans, and where entrepreneurs choose to locate.
Both states have also pursued broader tax reforms aimed at strengthening their economic outlooks. Iowa, for example, has reduced its top individual income tax rate from 8.98 percent to a flat 3.8 percent, while its corporate tax rate is scheduled to fall to 5.5 percent. Texas, long a zero-income-tax state, has emphasized maintaining a competitive fiscal environment as its population and economy have grown. Yet in both places, rising property taxes have emerged as a notable exception to otherwise pro-growth fiscal policies.
At the center of the debate is a basic fiscal relationship: when local government spending rises quickly, property tax collections tend to follow. Recognizing this, policymakers in both states have proposed measures aimed at slowing the growth of spending in order to stabilize future tax bills.
In Iowa, Gov. Kim Reynolds has proposed a 2 percent cap on annual property tax revenue growth for cities and counties, arguing that “the real driver of the problem” is spending growth. In Texas, Gov. Greg Abbott has called for limits that would tie local spending increases to population growth plus inflation, or a set percentage threshold, whichever is lower. While the details differ, the underlying premise is the same — aligning spending growth more closely with economic fundamentals can make property taxes more predictable and manageable over time.
Supporters say these approaches encourage more deliberate budgeting without requiring cuts to existing services, while critics caution that strict limits could constrain local flexibility, particularly in fast-growing communities or areas facing rising infrastructure costs. Those concerns highlight the importance of designing reforms that preserve the ability of local governments to meet changing needs.
Still, the broader lesson from states grappling with rising property taxes is that durable relief is unlikely to come from short-term fixes alone. Rebates, exemptions, and temporary rate reductions can provide immediate help, but without addressing the pace at which spending expands, those gains can be quickly offset by future increases.
Property taxes will remain a central tool for funding schools, public safety, and essential local services. The challenge for policymakers is ensuring they grow at a pace that reflects both community needs and taxpayers’ ability to pay. As affordability concerns continue to shape policy debates nationwide, the experiences of states like Iowa and Texas suggest that the path to lasting relief runs not only through tax policy, but through the fiscal decisions that determine how quickly government grows.
If property tax bills are to become more predictable — and more sustainable — the conversation must begin with spending.
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