Where Do Iowa’s Property Taxes Go?

For the first time in state history, local governments collected over $7 billion in property taxes.

In fiscal year 2025, Iowa property taxpayers reached an unprecedented milestone. For the first time in state history, local governments collected over $7 billion in property taxes during the fiscal year. This landmark was driven by a 6.79% increase in property tax collections compared to the previous year, marking a significant jump in the state’s tax burden.

Who Receives the Largest Share?

Iowa’s K-12 school districts have historically claimed the largest portion of property taxes among local governments. In fiscal year 2025, schools account for approximately 40% of all property tax revenue. Cities follow with 30%, and counties take 22%.

While their shares are smaller, community colleges, county hospitals, and county assessors still collect notable amounts, representing a significant impact on Iowa taxpayers. The smallest portions of property tax revenue go to townships and agricultural extensions.

How We Arrived Here

Over nearly five decades under the current property tax system, Iowa’s tax collections have surged by $6.3 billion—a staggering 643% increase from 1977 to 2025. For perspective, inflation (CPI) rose by just 421% over the same period.

Looking ahead, there’s little indication this upward trend will reverse. Historical data reveals only two instances in the last 50 years where total property tax collections in Iowa decreased from one year to the next: in 1987-1988 and again in 1996-1997.

The timeline to hit billion-dollar milestones in property tax revenue has also accelerated dramatically. It took 14 years for the state to go from $1 billion to $2 billion in collections, but more recently, these milestones are being reached in just three to four years.

Rising Property Tax Challenges

Understanding Iowa's property tax landscape is crucial, particularly for policymakers, as taxpayers face increasing financial demands to support local government operations. The rapid growth in collections—outpacing inflation over decades—raises critical questions because the current trend of tax increases is not sustainable. Lawmakers in Des Moines will need to address the challenge of balancing public needs with the financial burden on taxpayers at the local level. Continuous evaluation of spending priorities will be vital to curbing unsustainable property tax growth and safeguarding the financial well-being of future generations.

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