{"id":38828,"date":"2023-02-28T16:00:00","date_gmt":"2023-02-28T22:00:00","guid":{"rendered":"https:\/\/itrfoundation.org\/?p=38828"},"modified":"2023-02-28T16:06:45","modified_gmt":"2023-02-28T22:06:45","slug":"credit-versus-exemption-in-homestead-property-tax-relief","status":"publish","type":"post","link":"https:\/\/itrfoundation.org\/credit-versus-exemption-in-homestead-property-tax-relief\/","title":{"rendered":"Credit Versus Exemption in Homestead Property Tax Relief"},"content":{"rendered":"\n

The benefit of switching to a set dollar exemption is taxpayers would receive a predictable and permanent form of relief that does not depend on the state\u2019s fiscal situation.<\/em><\/strong><\/p>\n\n\n\n

A tax bill<\/a> proposed in the 2023 Legislature would switch Iowa from a credit to an exemption as the form of property tax relief for homesteads \u2014 or residents\u2019 primary housing. This policy brief provides background on the change, explaining the difference between the policies, describing Iowa\u2019s experience with its homestead credit, and considering the impact the change will have on taxpayers.<\/p>\n\n\n\n

Policy Summary<\/h4>\n\n\n\n

Homestead programs are among the most common approaches to property tax relief. As of 2018, 33 states<\/a> had homestead credits, exemptions, or both. The benefits are usually available for all owner-occupied primary residences, although some states expand their programs for seniors. <\/p>\n\n\n\n

Businesses, renters, and owners of second homes are typically not eligible for homestead relief and, as a result, bear a larger share of the property tax burden. Although states\u2019 programs vary, they all are structured around either fixed dollar amounts or specified percentages. The overall effect is to reduce property taxes and make them more progressive<\/p>\n\n\n\n