Bill Text: IA SSB1125 | 2023-2024 | 90th General Assembly | Introduced

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Bill Title: A bill for an act relating to state and local revenue and finances by modifying sales and use taxes, the charitable conservation contribution tax credit available against individual and corporate income taxes, the water service tax, property taxes, transit funding, and local option taxes, crediting moneys to the natural resources and outdoor recreation trust fund, making appropriations, and including effective date, retroactive applicability, and applicability provisions.(See SF 550.)

Spectrum: Committee Bill

Status: (Introduced) 2023-03-09 - Committee report approving bill, renumbered as SF 550. [SSB1125 Detail]

Download: Iowa-2023-SSB1125-Introduced.html

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Senate Study Bill 1125 - Introduced
SENATE FILE _____
BY (PROPOSED COMMITTEE ON
WAYS AND MEANS BILL BY
CHAIRPERSON DAWSON)
A BILL FOR
An Act relating to state and local revenue and finances by
modifying sales and use taxes, the charitable conservation
contribution tax credit available against individual and
corporate income taxes, the water service tax, property
taxes, transit funding, and local option taxes, crediting
moneys to the natural resources and outdoor recreation trust
fund, making appropriations, and including effective date,
retroactive applicability, and applicability provisions.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
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DIVISION I
SALES AND USE TAX RATES AND DISTRIBUTION
Section 1. Section 423.2, subsection 1, unnumbered
paragraph 1, Code 2023, is amended to read as follows:
There is imposed a tax of six percent at the rate specified
in subsection 12 upon the sales price of all sales of tangible
personal property, sold at retail in the state to consumers or
users except as otherwise provided in this subchapter .
Sec. 2. Section 423.2, subsections 2 and 3, Code 2023, are
amended to read as follows:
2. A tax of six percent at the rate specified in subsection
12 is imposed upon the sales price of the sale or furnishing
of gas, electricity, water, heat, pay television service, and
communication service, including the sales price from such
sales by any municipal corporation or joint water utility
furnishing gas, electricity, water, heat, pay television
service, and communication service to the public in its
proprietary capacity, except as otherwise provided in this
subchapter , when sold at retail in the state to consumers or
users.
3. A tax of six percent at the rate specified in subsection
12 is imposed upon the sales price of all sales of tickets
or admissions to places of amusement, fairs, and athletic
events except those of elementary and secondary educational
institutions. A tax of six percent at the rate specified in
subsection 12 is imposed on the sales price of an entry fee or
like charge imposed solely for the privilege of participating
in an activity at a place of amusement, fair, or athletic event
unless the sales price of tickets or admissions charges for
observing the same activity are taxable under this subchapter .
A tax of six percent at the rate specified in subsection 12
is imposed upon that part of private club membership fees or
charges paid for the privilege of participating in any athletic
sports provided club members.
Sec. 3. Section 423.2, subsection 4, paragraph a, Code 2023,
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is amended to read as follows:
a. A tax of six percent at the rate specified in subsection
12 is imposed upon the sales price derived from the operation
of all forms of amusement devices and games of skill, games of
chance, raffles, and bingo games as defined in chapter 99B , and
card game tournaments conducted under section 99B.27 , that are
operated or conducted within the state, the tax to be collected
from the operator in the same manner as for the collection of
taxes upon the sales price of tickets or admission as provided
in this section . Nothing in this subsection shall legalize any
games of skill or chance or slot-operated devices which are now
prohibited by law.
Sec. 4. Section 423.2, subsection 5, Code 2023, is amended
to read as follows:
5. There is imposed a tax of six percent at the rate
specified in subsection 12 upon the sales price from the
furnishing of services as defined in section 423.1 .
Sec. 5. Section 423.2, subsection 7, paragraph a,
unnumbered paragraph 1, Code 2023, is amended to read as
follows:
A tax of six percent at the rate specified in subsection 12
is imposed upon the sales price from the sales, furnishing, or
service of solid waste collection and disposal service.
Sec. 6. Section 423.2, subsection 8, paragraph a, Code 2023,
is amended to read as follows:
a. A tax of six percent at the rate specified in subsection
12 is imposed on the sales price from sales of bundled
transactions. For the purposes of this subsection , a “bundled
transaction” is the retail sale of two or more distinct and
identifiable products, except real property and services to
real property, which are sold for one nonitemized price. A
“bundled transaction” does not include the sale of any products
in which the sales price varies, or is negotiable, based on
the selection by the purchaser of the products included in the
transaction.
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Sec. 7. Section 423.2, subsection 9, Code 2023, is amended
to read as follows:
9. A tax of six percent at the rate specified in
subsection 12 is imposed upon the sales price from any mobile
telecommunications service, including all paging services,
that this state is allowed to tax pursuant to the provisions
of the federal Mobile Telecommunications Sourcing Act, Pub.
L. No. 106-252, 4 U.S.C. §116 et seq. For purposes of this
subsection , taxes on mobile telecommunications service, as
defined under the federal Mobile Telecommunications Sourcing
Act that are deemed to be provided by the customer’s home
service provider, shall be paid to the taxing jurisdiction
whose territorial limits encompass the customer’s place of
primary use, regardless of where the mobile telecommunications
service originates, terminates, or passes through and
shall in all other respects be taxed in conformity with
the federal Mobile Telecommunications Sourcing Act. All
other provisions of the federal Mobile Telecommunications
Sourcing Act are adopted by the state of Iowa and incorporated
into this subsection by reference. With respect to mobile
telecommunications service under the federal Mobile
Telecommunications Sourcing Act, the director shall, if
requested, enter into agreements consistent with the provisions
of the federal Act.
Sec. 8. Section 423.2, subsection 10, paragraph a, Code
2023, is amended to read as follows:
a. A tax of six percent at the rate specified in subsection
12 is imposed on the sales price of specified digital products
sold at retail in the state. The tax applies whether the
purchaser obtains permanent use or less than permanent use of
the specified digital product, whether the sale is conditioned
or not conditioned upon continued payment from the purchaser,
and whether the sale is on a subscription basis or is not on a
subscription basis.
Sec. 9. Section 423.2, subsection 12, Code 2023, is amended
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by striking the subsection and inserting in lieu thereof the
following:
12. a. For the period beginning January 1, 2025, through
December 31, 2050, the sales tax rate is seven percent.
b. Beginning January 1, 2051, the sales tax rate is six
percent.
Sec. 10. Section 423.2A, subsection 2, paragraphs a, b, and
c, Code 2023, are amended to read as follows:
a. (1) Transfer For the period beginning January 1,
2025, through December 31, 2027, transfer twenty-eight
one-hundred-fortieths of the revenues collected under deposited
into the general fund of the state under subsection 1 to the
appropriate county accounts under chapter 423B for the counties
from which the tax was collected .
(2) For the period beginning January 1, 2028, through
December 31, 2028, transfer twenty-seven one-hundred-fortieths
of the revenues deposited into the general fund of the state
under subsection 1 to the appropriate county accounts under
chapter 423B for the counties from which the tax was collected.
(3) For the period beginning January 1, 2029, through
December 31, 2029, transfer twenty-six one-hundred-fortieths of
the revenues deposited into the general fund of the state under
subsection 1 to the appropriate county accounts under chapter
423B for the counties from which the tax was collected.
(4) For the period beginning January 1, 2030, through
December 31, 2050, transfer twenty-five one-hundred-fortieths
of the revenues deposited into the general fund of the state
under subsection 1 to the appropriate county accounts under
chapter 423B for the counties from which the tax was collected.
(5) Beginning January 1, 2051, transfer five twenty-fourths
of the revenues deposited into the general fund of the state
under subsection 1 to the appropriate county accounts under
chapter 423B for the counties from which the tax was collected.
b. Transfer from the remaining revenues the amounts required
under Article VII, section 10, of the Constitution of the State
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of Iowa to the natural resources and outdoor recreation trust
fund created in section 461.31 , if applicable .
c. Transfer one-sixth of from the remaining revenues an
amount equal to one-seventh of the revenues deposited into the
general fund of the state under subsection 1 to the secure an
advanced vision for education fund created in section 423F.2 .
This paragraph “c” is repealed January 1, 2051.
Sec. 11. Section 423.5, subsection 1, unnumbered paragraph
1, Code 2023, is amended to read as follows:
Except as provided in paragraph “b” , an excise tax at the
rate of six percent specified in subsection 4 of the purchase
price or installed purchase price is imposed on the following:
Sec. 12. Section 423.5, subsection 4, Code 2023, is amended
by striking the subsection and inserting in lieu thereof the
following:
4. a. For the period beginning January 1, 2025, through
December 31, 2050, the use tax rate is seven percent.
b. Beginning January 1, 2051, the use tax rate is six
percent.
Sec. 13. Section 423.43, subsection 1, paragraph b, Code
2023, is amended by striking the paragraph and inserting in
lieu thereof the following:
b. Subsequent to the deposit into the general fund of
the state the department shall do the following in the order
prescribed:
(1) (a) For the period beginning January 1, 2025, through
December 31, 2043, transfer one-seventh of such revenues to the
local use tax supplement fund, under section 423B.1A.
(b) For the period beginning January 1, 2044, through
December 31, 2050, transfer one-seventh of such revenues to the
appropriate county accounts under chapter 423B for the counties
from which the tax was paid.
(c) Beginning January 1, 2051, transfer one-sixth of such
revenues to the appropriate county accounts under chapter 423B
for the counties from which the tax was paid.
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(2) Transfer one-sixth of such remaining revenues to the
secure an advanced vision for education fund created in section
423F.2. This subparagraph is repealed January 1, 2051.
Sec. 14. EFFECTIVE DATE. This division of this Act takes
effect January 1, 2025.
DIVISION II
WATER SERVICE TAX
Sec. 15. Section 423G.3, Code 2023, is amended to read as
follows:
423G.3 Water service tax.
An excise tax at the a rate of six percent equal to the rate
being imposed under section 423.2, subsection 12, is imposed on
the sales price from the sale or furnishing by a water utility
of a water service in the state to consumers or users.
Sec. 16. Section 423G.6, subsection 2, Code 2023, is amended
by striking the subsection.
Sec. 17. REPEAL. Chapter 423G.7, Code 2023, is repealed.
Sec. 18. EFFECTIVE DATE. This division of this Act takes
effect January 1, 2025.
DIVISION III
LOCAL OPTION TAXES
Sec. 19. Section 15J.7, subsection 2, Code 2023, is amended
to read as follows:
2. In addition to the moneys received pursuant to section
15J.6 , a municipality may deposit in the reinvestment project
fund any other moneys lawfully at the municipality’s disposal,
including but not limited to local sales and services tax
receipts collected revenues received under chapter 423B if such
use is a purpose authorized for the municipality under chapter
423B .
Sec. 20. Section 28A.17, Code 2023, is amended to read as
follows:
28A.17 Local sales and services tax.
1. If an authority is established as provided in section
28A.6 and after approval of a referendum by a simple majority
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of votes cast in each metropolitan area in favor of the sales
and services tax, the governing board of a county in this state
within a metropolitan area which is part of the authority shall
impose, at the request of the authority, a local sales and
services tax at the rate of one-fourth of one percent on the
sales price taxed by this state under section 423.2 , within
the metropolitan area located in this state. The referendum
shall be called by resolution of the board and shall be held
as provided in section 28A.6 to the extent applicable. The
ballot proposition shall contain a statement as to the specific
purpose or purposes for which the revenues shall be expended
and the date of expiration of the tax. The local sales and
services tax shall be imposed on the same basis, with the same
exceptions, and following the same administrative procedures as
provided for a county under sections 423B.5 and 423B.6 , Code
2023 . The amount of the sale, for the purposes of determining
the amount of the local sales and services tax under this
section , does not include the amount of any local sales and
services tax imposed under sections 423B.5 and 423B.6 , Code
2023 .
2. The treasurer of state shall credit the local sales
and services tax receipts and interest and penalties to the
authority’s account. Moneys in this account shall be remitted
quarterly to the authority. The proceeds of the tax imposed
under this section shall be used only for the construction,
reconstruction, or repair of metropolitan facilities as
specified in the referendum. The local sales and services tax
imposed under this section may be suspended for not less than
a fiscal quarter or more than one year by action of the board.
The suspension may be renewed or continued by the board, but
the board shall act on the suspension at least annually.
The local sales and services tax may also be repealed by a
petition and favorable referendum following the procedures and
requirements of sections 28A.5 and 28A.6 as applicable. The
board shall give the department of revenue at least forty days’
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notice of the repeal, suspension, or reinstatement of the tax
and the effective dates for imposition, suspension, or repeal
of the tax shall be as provided in section 423B.6 , Code 2023 .
3. A local sales and services tax authorized under this
section shall not be imposed or collected on or after January
1, 2025.
Sec. 21. Section 76.4, Code 2023, is amended to read as
follows:
76.4 Permissive application of funds.
Whenever the governing authority of such political
subdivision shall have on hand funds derived from any other
source than taxation which may be appropriated to the payment
either of interest or principal, or both principal and interest
of such bonds, such funds may be so appropriated and used
and the levy for the payment of the bonds correspondingly
reduced. This section shall not restrict the authority of a
political subdivision to apply sales and services tax receipts
collected received pursuant to chapter 423B for such purpose.
Notwithstanding section 423F.3 , a school district may apply tax
receipts received pursuant to chapter 423F for the purposes of
this section .
Sec. 22. Section 99B.1, subsection 23, Code 2023, is amended
to read as follows:
23. “Net receipts” means gross receipts less amounts awarded
as prizes and less state and local sales tax paid upon the
gross receipts.
Sec. 23. Section 99B.14, subsection 1, Code 2023, is amended
to read as follows:
1. A licensed qualified organization shall certify
that the receipts from all charitable gambling conducted
by the organization under this chapter , less reasonable
expenses, charges, fees, taxes, and deductions, either will
be distributed as prizes to participants or will be dedicated
and distributed for educational, civic, public, charitable,
patriotic, or religious uses. Reasonable expenses, charges,
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fees, taxes other than the state and local sales tax, and
deductions allowed by the department shall not exceed forty
percent of net receipts.
Sec. 24. Section 99G.4, subsection 2, Code 2023, is amended
to read as follows:
2. The income and property of the authority shall be exempt
from all state and local taxes, and the sale of lottery tickets
and shares issued and sold by the authority and its retail
licensees shall be exempt from all state and local sales taxes.
Sec. 25. Section 99G.30A, subsection 2, paragraph a, Code
2023, is amended to read as follows:
a. The director of revenue shall administer the monitor
vending machine excise tax as nearly as possible in conjunction
with the administration of state sales tax laws. The director
shall provide appropriate forms or provide appropriate entries
on the regular state tax forms for reporting local sales and
services tax liability.
Sec. 26. Section 279.63, subsection 2, paragraph a, Code
2023, is amended to read as follows:
a. All property tax levies , and income surtaxes , and local
option sales taxes in place in the school district, listed by
type of levy, rate, amount, duration, and notification of the
maximum rate and amount limitations permitted by statute.
Sec. 27. Section 321.40, subsection 5, Code 2023, is amended
by striking the subsection.
Sec. 28. Section 321.130, Code 2023, is amended to read as
follows:
321.130 Fees in lieu of taxes.
The registration fees imposed by this chapter upon private
passenger motor vehicles or semitrailers are in lieu of all
state and local taxes , except local vehicle taxes, to which
motor vehicles or semitrailers are subject.
Sec. 29. Section 418.13, subsection 2, Code 2023, is amended
to read as follows:
2. In addition to the moneys received pursuant to section
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418.10 or 418.12 , a governmental entity may deposit in the
flood project fund any other moneys lawfully received by the
governmental entity, including but not limited to local sales
and services tax receipts collected amounts received under
chapter 423B .
Sec. 30. Section 421.26, Code 2023, is amended to read as
follows:
421.26 Personal liability for tax due.
If a licensee or other person under section 452A.65 , a
retailer or purchaser under chapter 423A , 423B , 423C , 423D , or
423E , or section 423.14 , 423.14A , 423.29 , 423.31 , or 423.33 ,
or a user under section 423.34 , or a permit holder or licensee
under section 453A.13 , 453A.16 , or 453A.44 fails to pay a tax
under those sections when due, an officer of a corporation
or association, notwithstanding section 489.304 , a member or
manager of a limited liability company, or a partner of a
partnership, having control or supervision of or the authority
for remitting the tax payments and having a substantial legal
or equitable interest in the ownership of the corporation,
association, limited liability company, or partnership, who has
intentionally failed to pay the tax is personally liable for
the payment of the tax, interest, and penalty due and unpaid.
However, this section shall not apply to taxes on accounts
receivable. The dissolution of a corporation, association,
limited liability company, or partnership shall not discharge a
person’s liability for failure to remit the tax due.
Sec. 31. Section 421.28, Code 2023, is amended to read as
follows:
421.28 Exceptions to successor liability.
The immediate successor to a licensee’s or retailer’s
business or stock of goods under chapter 423A or 423B , or
section 423.33 or 452A.65 , is not personally liable for
the amount of delinquent tax, interest, or penalty due and
unpaid if the immediate successor shows that the purchase of
the business or stock of goods was made in good faith that
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no delinquent tax, interest, or penalty was due and unpaid.
For purposes of this section the immediate successor shows
good faith by evidence that the department had provided
the immediate successor with a certified statement that
no delinquent tax, interest, or penalty is unpaid, or that
the immediate successor had taken in good faith a certified
statement from the licensee, retailer, or seller that no
delinquent tax, interest, or penalty is unpaid. When requested
to do so by a person with whom the licensee or retailer is
negotiating the sale of the business or stock of goods, the
director of revenue shall, upon being satisfied that such
a situation exists, inform that person as to the amount of
unpaid delinquent tax, interest, or penalty due by the licensee
or the retailer. The giving of the information under this
circumstance is not a violation of section 422.20 , 422.72 , or
452A.63 .
Sec. 32. Section 421.60, subsection 2, paragraph m,
subparagraphs (1) and (2), Code 2023, are amended to read as
follows:
(1) The director may abate unpaid state sales and use
taxes and local sales and services taxes owed by a retailer
in the event that the retailer failed to collect tax from the
purchaser as a result of erroneous written advice issued by
the department that was specially directed to the retailer
by the department and the retailer is unable to collect the
tax, interest, or penalties from the purchaser. Before the
tax, interest, and penalties shall be abated on the basis of
erroneous written advice, the retailer must present a copy of
the retailer’s request for written advice to the department and
a copy of the department’s reply. The department shall not
maintain a position against the retailer that is inconsistent
with the erroneous written advice, except on the basis of
subsequent written advice sent by the department to that
retailer, or a change in state or federal law, a reported
court case to the contrary, a contrary rule adopted by the
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department, a change in material facts or circumstances
relating to the retailer, or the retailer’s misrepresentation
or incomplete or inadequate representation of material facts
and circumstances in requesting the written advice.
(2) (a) The director shall abate the unpaid state sales
and use taxes and any local sales and services taxes owed by a
retailer where the retailer failed to collect the tax from the
purchaser on the charges paid for access to on-line computer
services as a result of erroneous written advice issued by the
department regarding the taxability of charges paid for access
to on-line computer services. To qualify for the abatement
under this subparagraph, the erroneous written advice shall
have been issued by the department prior to July 1, 1999, and
shall have been specially directed to the retailer by the
department.
(b) If an abatement of unpaid state sales and use taxes and
any local sales and services taxes is granted to the retailer
by the director pursuant to this subparagraph, the department
is precluded from collecting from the purchaser any unpaid
state sales and use taxes and any local sales and services
taxes which were abated.
Sec. 33. Section 422.72, subsection 6, paragraph a, Code
2023, is amended to read as follows:
a. The department may enter into a written informational
exchange agreement for tax administration purposes with a city
or county which is entitled to receive funds due to a local
hotel and motel tax or a local sales and services tax . The
written informational exchange agreement shall designate no
more than two paid city or county employees that have access to
actual return information relating to that city’s or county’s
receipts from a local hotel and motel tax or a local sales and
services tax .
Sec. 34. Section 423.4, subsection 2, paragraph d, Code
2023, is amended by striking the paragraph.
Sec. 35. Section 423.4, subsection 5, paragraph f, Code
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2023, is amended to read as follows:
f. Notwithstanding the state sales tax imposed in section
423.2 , a rebate issued pursuant to this subsection shall not
exceed an amount equal to five percent of the sales price
of the tangible personal property or services furnished to
purchasers at the automobile racetrack facility. Any local
option taxes paid and collected shall not be subject to rebate
under this subsection .
Sec. 36. Section 423.4, subsection 7, paragraph f, Code
2023, is amended to read as follows:
f. The refund in this subsection applies only to state
sales and use tax paid and does not apply to local option
sales and services taxes imposed pursuant to chapter 423B .
Notwithstanding the state sales tax imposed in section 423.2 ,
a refund issued pursuant to this section shall not exceed
an amount equal to five percent of the sales price of the
fuel used to create heat, power, and steam for processing
or generating electrical current or from the sale price
of electricity consumed by computers, machinery, or other
equipment for operation of the data center business facility.
Sec. 37. Section 423.4, subsection 8, paragraph g, Code
2023, is amended to read as follows:
g. The refund in this subsection applies only to state
sales and use tax paid and does not apply to local option
sales and services taxes imposed pursuant to chapter 423B .
Notwithstanding the state sales tax imposed in section 423.2 ,
a refund issued pursuant to this section shall not exceed an
amount equal to five percent of the sales price of the items
listed in paragraph “a” , subparagraphs (1), (2), and (3).
Sec. 38. Section 423.14A, subsection 2, Code 2023, is
amended to read as follows:
2. In addition to and not in lieu of any application of
this chapter to sellers who are retailers and sellers who are
retailers maintaining a place of business in this state, any
person described in subsection 3 , or the person’s agents,
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shall be considered a retailer in this state and a retailer
maintaining a place of business in this state for purposes of
this chapter on or after January 1, 2019, and shall be subject
to all requirements of this chapter imposed on retailers and
retailers maintaining a place of business in this state,
including but not limited to the requirement to collect and
remit sales and use taxes pursuant to sections 423.14 and
423.29 , and local option taxes under chapter 423B .
Sec. 39. Section 423.33, subsection 1, paragraph c, Code
2023, is amended to read as follows:
c. If the retailer fails to collect sales tax at the time
of the transaction, the retailer shall thereafter remit the
applicable sales tax, or the purchaser thereafter shall remit
the applicable use tax. If the purchaser remits all applicable
use tax, the retailer remains liable for any local sales and
services tax under chapter 423B that the retailer failed to
collect.
Sec. 40. Section 423.34A, unnumbered paragraph 1, Code
2023, is amended to read as follows:
A purchaser is relieved of liability for payment of state
sales or use tax, for payment of any local option sales tax,
for payment of interest, or for payment of any penalty for
nonpayment of tax which nonpayment is not fraudulent, willful,
or intentional, under the following circumstances:
Sec. 41. Section 423.36, subsection 9, paragraph a, Code
2023, is amended to read as follows:
a. Except as provided in paragraph “b” , purchasers, users,
and consumers of tangible personal property, specified digital
products, or enumerated services taxed pursuant to subchapter
II or III of this chapter or chapter 423B may be authorized,
pursuant to rules adopted by the director, to remit tax owed
directly to the department instead of the tax being collected
and paid by the seller. To qualify for a direct pay tax permit,
the purchaser, user, or consumer must accrue a tax liability
of more than four thousand dollars in tax under subchapters
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II and III in a semimonthly period and make deposits and file
returns pursuant to section 423.31 . This authority shall not
be granted or exercised except upon application to the director
and then only after issuance by the director of a direct pay
tax permit.
Sec. 42. Section 423B.1, Code 2023, is amended by striking
the section and inserting in lieu thereof the following:
423B.1 Use of revenues deposited in the local sales and use
tax fund —— revenue purpose statement.
1. a. Revenues credited to and deposited in each county’s
account within the local sales and use tax fund shall be
expended by each recipient county and city as required by the
revenue purpose statement, subject to the requirements of
section 423B.7, subsection 7, and approved under this section
for the city or for the county for the unincorporated areas of
the county, or as required by subsection 3.
b. A revenue purpose statement for the use of local option
sales and services tax revenue under this chapter approved at
election prior to January 1, 2025, and in effect on or set
to take effect on or after January 1, 2025, and the use of
revenues received under this chapter for purposes authorized
under section 423B.10 for ordinances in effect and approved
before January 1, 2025, shall continue in effect for revenues
received under this chapter until the expiration of the revenue
purpose statement or ordinance, if applicable, or until the
county board of supervisors or city council, as applicable,
adopts a new revenue purpose statement under subsection 2 or
repeals or amends the ordinance for the use of revenues under
section 423B.10.
2. The board of supervisors of each county and the city
council of each city may adopt by resolution a revenue purpose
statement for the expenditure of funds received under this
chapter.
3. Each city and county without a valid revenue purpose
statement shall expend the revenues received for the following
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purposes in the order prescribed in this subsection, except
that the payment of bonds for which the revenues have been
pledged shall be paid first:
a. Reduction of the county’s basic levies under section
331.423 or reduction of the city general fund levy under
section 384.1, as applicable.
b. Reduction of any debt service levy of the county or city,
as applicable.
c. Reduction of the city’s additional taxes levied under
section 384.12 or the county’s supplemental levies under
section 331.424, as applicable.
d. Reduction of any other property tax levy of the county
or city, as applicable.
Sec. 43. NEW SECTION . 423B.1A Local use tax supplement
fund.
1. A local use tax supplement fund is created in the state
treasury under the control of the department of revenue. The
fund shall consist of all moneys transferred under section
423.43, subsection 1, paragraph “b” , subparagraph (1),
subparagraph division (a), and moneys appropriated to the fund.
2. Moneys in the local use tax supplement fund are annually
appropriated to the department of revenue and shall be used for
supplement payments to cities and counties under this section.
3. For each year during the period beginning January 1,
2025, through December 31, 2043, each city or county for the
unincorporated portion of the county, shall receive a local
use tax supplement payment equal to the difference, but not
less than zero between the amount of revenue received by the
city or county under section 423B.7, Code 2023, for the period
beginning January 1, 2024, and ending December 31, 2024, minus
the amount that would have been received by that city or county
for that period if all cities and the county were eligible for
distributions of such revenues under section 423B.7, Code 2023.
If moneys in the fund are insufficient to pay all supplement
amounts for the year, the director of revenue shall prorate the
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payment of the supplement payments and shall notify the cities
and counties of the pro rata percentage.
4. The supplement payment calculated under subsection 3
shall be paid to each city or county for the unincorporated
area of the county and shall be combined with and be used in the
same manner and be subject to the same requirements as moneys
received by the city or county under section 423B.7 for that
year.
5. Notwithstanding section 12C.7, subsection 2, interest or
earnings on moneys deposited in the local use tax supplement
fund shall be credited to the local use tax supplement fund.
Notwithstanding section 8.33, moneys credited to the local use
tax supplement fund shall not revert at the close of a fiscal
year.
6. This section is repealed January 1, 2044. Moneys in the
fund upon the repeal of this section shall be transferred to
the appropriate county accounts under section 423B.7 for the
counties from which the tax was paid.
Sec. 44. Section 423B.7, subsection 1, Code 2023, is amended
to read as follows:
1. a. Except as provided in paragraphs paragraph “b” and
“c” , the director shall credit the local sales and services tax
receipts and interest and penalties from a county-imposed tax
as specified in section 423.2A, subsection 2, paragraph “a” ,
including any interest and penalties, to the county’s account
in the local sales and services use tax fund for the county in
from which the tax was collected. The director shall credit
the use tax receipts as specified in section 423.43, subsection
1, paragraph “b” , subparagraph (1), subparagraph divisions (b)
and (c), including any interest and penalties, to the county’s
account in the local sales and use tax fund for the county
from which the use tax was paid. If the director is unable to
determine from which county any of the receipts were collected
or paid, as applicable , those receipts shall be allocated among
the possible counties based on allocation rules adopted by the
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director.
b. The director shall credit the designated amount of the
increase in local sales and services tax receipts, as computed
in section 423B.10 , collected in an urban renewal area of an
eligible city that has adopted an ordinance pursuant to section
423B.10, subsection 2 , into a special city account in the local
sales and services use tax fund.
c. The director shall credit the local sales and services
tax receipts and interest and penalties from a city-imposed tax
under section 423B.1, subsection 2 , to the city’s account in
the local sales and services tax fund.
Sec. 45. Section 423B.7, subsections 2, 3, and 4, Code 2023,
are amended to read as follows:
2. The director of revenue by the last day of each
month shall transfer to each city or county where the local
option tax is imposed the amount of tax moneys remitted to
the department attributable to each city or county from the
preceding month.
3. Seventy-five percent of each county’s account shall be
remitted on the basis of the county’s population residing in
the unincorporated area where the tax was imposed and those the
incorporated areas where the tax was imposed as follows:
a. To the board of supervisors a pro rata share based upon
the percentage of the above population of the county residing
in the unincorporated area of the county where the tax was
imposed according to the most recent certified federal census.
b. To each city in the county where the tax was imposed
a pro rata share based upon the percentage of the city’s
population residing in the county to the above population of
the county according to the most recent certified federal
census.
c. If a subsequent certified census exists which modifies
that most recent certified federal census for a participating
jurisdiction under paragraphs “a” and “b” , the computations
under paragraphs “a” and “b” shall utilize the subsequent
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certified census in the distribution formula under rules
established by the director of revenue.
4. Twenty-five percent of each county’s account shall
be remitted based on the sum of property tax dollars levied
by the board of supervisors if the tax was imposed in the
unincorporated areas and by each city in the county where the
tax was imposed during the three-year period beginning July 1,
1982, and ending June 30, 1985, as follows:
a. To the board of supervisors a pro rata share based upon
the percentage of the total property tax dollars levied by the
board of supervisors during the above three-year period.
b. To each city council where the tax was imposed a pro rata
share based upon the percentage of property tax dollars levied
by the city during the above three-year period of the above
total property tax dollars levied by the board of supervisors
and each city where the tax was imposed during the above
three-year period.
Sec. 46. Section 423B.7, subsection 5, Code 2023, is amended
by striking the subsection.
Sec. 47. Section 423B.7, subsections 6 and 7, Code 2023, are
amended to read as follows:
6. From each special city account under subsection 1,
paragraph “b” , the sales and services tax revenues shall be
remitted to the city council for deposit in the special fund
created in section 403.19, subsection 2 , to be used by the city
as provided in section 423B.10 . The distribution from the
special city account is not subject to the distribution formula
provided in subsections 3 , and 4 , and 5 .
7. a. Subject to the requirement of paragraph “b” and the
requirements under section 423B.1, subsection 3 , local sales
and services tax moneys amounts received by a city or county
under this chapter may be expended for any lawful purpose of
the city or county, including but not limited to expenses
related to providing emergency medical services within the
applicable city or county.
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b. Each city located in whole or in part in a qualified
county and each qualified county for the unincorporated area
for which the imposition of the local sales and services tax
in the city or portion thereof or the unincorporated area, as
applicable, was revenue purpose statement approved at election
on or after January 1, 2019 2025 , shall require the use of
not less than fifty percent of the moneys received from the
qualified county’s account in the local sales and services
tax fund applicable county under this chapter for property
tax relief. However, for a county with a population of four
hundred thousand or more, a revenue purpose statement governing
the use of revenues for the unincorporated area of the county
approved on or after January 1, 2025, shall require the use of
seventy-five percent of the moneys received by the county under
this chapter for property tax relief.
c. For purposes of this subsection, property tax relief
includes payments under a chapter 28E agreement for purposes of
a regional transit district if such payments are used to reduce
the regional transit district levy under section 28M.5. For a
city located in whole or in part in a county with a population
of four hundred thousand or more, the use of revenues received
under this chapter for the purposes of this paragraph shall
not exceed ten percent of the amount received and for a county
with a population of four hundred thousand or more, for the
unincorporated area, shall not exceed twenty-five percent of
the amount received under this chapter.
Sec. 48. Section 423B.9, subsection 1, paragraphs b and c,
Code 2023, are amended to read as follows:
b. “Designated portion” means the portion of the local
option sales and services tax revenues received under this
chapter which is authorized to be expended for one or a
combination of purposes under an adopted public measure.
c. “Secondary recipient” means a political subdivision of
the state which is to receive revenues amounts from a local
option sales and services tax revenues under this chapter
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over a period of years pursuant to the terms of a chapter 28E
agreement with one or more cities or counties.
Sec. 49. Section 423B.9, subsections 2 and 3, Code 2023, are
amended to read as follows:
2. An issuer of public bonds which is a recipient of
revenues from a local option sales and services tax imposed
pursuant to this chapter may issue bonds in anticipation of
the collection of one or more designated portions of the
local option sales and services tax such revenues and may
pledge irrevocably an amount of the revenue derived from the
designated portions for each of the years the bonds remain
outstanding to the payment of the bonds. Bonds may be issued
only for one or more of the purposes set forth on the ballot
proposition concerning the imposition of the local option sales
and services tax in the revenue purpose statement , except bonds
shall not be issued which are payable from that portion of tax
revenues designated for property tax relief. The bonds may be
issued in accordance with the procedures set forth in either
subsection 3 or 4 .
3. The governing body of an issuer may authorize the
issuance of bonds which are payable from the designated portion
of the revenues of the local option sales and services tax
received under this chapter , and not from property tax, by
following the authorization procedures set forth for cities
in section 384.83 . Bonds may be issued for the purpose of
refunding outstanding and previously issued bonds under this
subsection without otherwise complying with the provisions of
this subsection .
Sec. 50. Section 423B.9, subsection 4, paragraph b, Code
2023, is amended to read as follows:
b. The provisions of chapter 76 apply to the bonds payable
as provided in this subsection , except that the mandatory levy
to be assessed pursuant to section 76.2 shall be at a rate
to generate an amount which together with the receipts from
the pledged designated portion of the local option sales and
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services tax revenues received under this chapter is sufficient
to pay the interest and principal on the bonds. All amounts
collected as a result of the levy assessed pursuant to section
76.2 and paid out in the first instance for bond principal
and interest shall be repaid to the bond issuer which levied
the tax from the first available designated portion of local
option sales and services tax collections revenues received
under this chapter in excess of the requirement for the payment
of the principal and interest of the bonds and when repaid
shall be applied in reduction of property taxes. The amount
of bonds which may be issued under section 76.3 shall be the
amount which could be retired from the actual collections of
the designated portions of the local option sales and services
tax revenues received under this chapter for the last four
calendar quarters, as certified by the director of revenue.
The amount of tax revenues pledged jointly by other cities or
counties may be considered for the purpose of determining the
amount of bonds which may be issued. If the local option sales
and services tax has been in effect revenues have been received
under this chapter for less than four calendar quarters, the
tax collected revenues received within the shorter period may
be adjusted to project the collections amount of the designated
portion for the full year for the purpose of determining the
amount of the bonds which may be issued. The provisions of
this section constitute separate authorization for the issuance
of bonds and shall prevail in the event of conflict with
any other provision of the Code limiting the amount of bonds
which may be issued or the source of payment of the bonds.
Bonds issued under this section shall not limit or restrict
the authority of the bond issuer to issue bonds under other
provisions of the Code.
Sec. 51. Section 423B.9, subsection 5, Code 2023, is amended
to read as follows:
5. A city or county, jointly with one or more other
political subdivisions as provided in chapter 28E , may pledge
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irrevocably any amount derived from the designated portions
of the revenues of the local option sales and services tax
received under this chapter to the support or payment of bonds
of an issuer, issued for one or more purposes set forth on
the ballot proposition concerning the imposition of the local
option sales and services tax in the revenue purpose statement
or a political subdivision may apply the proceeds of its bonds
to the support of any such purpose.
Sec. 52. Section 423B.10, subsection 1, paragraph b, Code
2023, is amended to read as follows:
b. “Eligible city” means a city in which a local sales and
services tax imposed by the county applies or a city described
in section 423B.1, subsection 2 , paragraph “a” , and in which an
urban renewal area has been designated.
Sec. 53. Section 423B.10, subsections 2, 3, 5, and 6, Code
2023, are amended to read as follows:
2. a. Upon approval by the board of supervisors of each
applicable county pursuant to paragraph “b” , an eligible city
may by ordinance of the city council provide for the use of a
designated amount of the increased local sales and services
tax revenues collected received under this chapter which are
attributable to retail establishments in an urban renewal
area to fund urban renewal projects located in the area. The
designated amount may be all or a portion of such increased
revenues.
b. A city shall not adopt an ordinance under paragraph
“a” unless the board of supervisors of each county where the
urban renewal area from which such local sales and services
tax revenues are to be collected and used to fund urban
renewal projects is located first adopts a resolution approving
the collection and use of such local sales and services tax
revenues.
3. To determine the revenue increase for purposes of
subsection 2 , revenue amounts shall be calculated by the
department of revenue as follows:
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a. Determine the amount of local sales and services tax
revenue collected and attributable to a one percent sales and
services tax from retail establishments located in the area
comprising the urban renewal area during the base year.
b. Determine the current year one percent sales and services
tax revenue amount for each fiscal year following the base year
in the manner specified in paragraph “a” .
c. The excess of the amount determined in paragraph “b” over
the base year revenue amount determined in paragraph “a” is the
increase in the local sales and services tax revenues of which
the designated amount is to be deposited in the special city
account created in section 423B.7, subsection 6 .
5. In addition to the moneys received pursuant to the
ordinance authorized under subsection 2 , an eligible city
may deposit any other local sales and services tax revenues
received by it the city pursuant to the distribution formula in
section 423B.7, subsections 3, 4, and 5 , to the special fund
described in section 403.19, subsection 2 .
6. For purposes of this section , the eligible city shall
assist the department of revenue in identifying retail
establishments in the urban renewal area that are collecting
the local sales and services tax. This process shall be
ongoing until the ordinance is repealed.
Sec. 54. REPEAL. Sections 423B.2, 423B.3, 423B.4, 423B.5,
423B.6, and 423B.8, Code 2023, are repealed.
Sec. 55. EFFECTIVE DATE. This division of this Act takes
effect January 1, 2025.
DIVISION IV
HOMESTEAD PROPERTY TAX CREDIT
Sec. 56. Section 2.48, subsection 3, paragraph f,
subparagraph (1), Code 2023, is amended to read as follows:
(1) The homestead tax exemption and credit under chapter
425 .
Sec. 57. Section 25B.7, subsection 2, paragraph a, Code
2023, is amended by striking the paragraph.
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Sec. 58. Section 100.18, subsection 2, paragraph b, Code
2023, is amended to read as follows:
b. The rules shall require the installation of smoke
detectors in existing single-family rental units and
multiple-unit residential buildings. Existing single-family
dwelling units shall be equipped with approved smoke detectors.
A person who files for a homestead tax exemption and credit
pursuant to chapter 425 shall certify that the single-family
dwelling unit for which the credit is filed has a smoke
detector installed in compliance with this section , or that one
will be installed within thirty days of the date the filing
for the credit is made. The state fire marshal shall adopt
rules and establish appropriate procedures to administer this
subsection .
Sec. 59. Section 100.18, subsection 3, paragraph b, Code
2023, is amended to read as follows:
b. The rules shall require the installation of carbon
monoxide alarms in existing single-family rental units and
multiple-unit residential buildings that have a fuel-fired
heater or appliance, a fireplace, or an attached garage.
Existing single-family dwellings that have a fuel-fired heater
or appliance, a fireplace, or an attached garage shall be
equipped with approved carbon monoxide alarms. For purposes
of this paragraph, “approved carbon monoxide alarm” means a
carbon monoxide alarm that meets the standards established by
the underwriters’ laboratories or is approved by the state fire
marshal as established by rule under subsection 5 . A person
who files for a homestead tax exemption and credit pursuant
to chapter 425 shall certify that the single-family dwelling
for which the credit is filed and that has a fuel-fired heater
or appliance, a fireplace, or an attached garage, has carbon
monoxide alarms installed in compliance with this section ,
or that such alarms will be installed within thirty days of
the date the filing for the credit is made. The state fire
marshal shall adopt rules and establish appropriate procedures
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to administer this subsection .
Sec. 60. Section 103.22, subsection 7, Code 2023, is amended
to read as follows:
7. Prohibit an owner of property from performing work on the
owner’s principal residence, if such residence is an existing
dwelling rather than new construction and is not an apartment
that is attached to any other apartment or building, as those
terms are defined in section 499B.2 , and is not larger than a
single-family dwelling, or require such owner to be licensed
under this chapter . In order to qualify for inapplicability
pursuant to this subsection , a residence shall qualify for the
homestead tax exemption and credit .
Sec. 61. Section 105.11, subsection 3, Code 2023, is amended
to read as follows:
3. Prohibit an owner of property from performing work on the
owner’s principal residence, if such residence is an existing
dwelling rather than new construction and is not larger than a
single-family dwelling, or farm property, excluding commercial
or industrial installations or installations in public use
buildings or facilities, or require such owner to be licensed
under this chapter . In order to qualify for inapplicability
pursuant to this subsection , a residence shall qualify for the
homestead tax exemption and credit .
Sec. 62. Section 216.12, subsection 1, paragraph e, Code
2023, is amended to read as follows:
e. The rental or leasing of a housing accommodation in a
building which contains housing accommodations for not more
than four families living independently of each other, if the
owner resides in one of the housing accommodations for which
the owner qualifies for the homestead tax exemption and credit
under section 425.1 .
Sec. 63. Section 321.1, subsection 6C, Code 2023, is amended
to read as follows:
6C. “Bona fide residence” or “bona fide address” means the
current street or highway address of an individual’s residence.
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The bona fide residence of a person with more than one dwelling
is the dwelling for which the person claims a homestead tax
exemption and credit under chapter 425 , if applicable. The
bona fide residence of a homeless person is a primary nighttime
residence meeting one of the criteria listed in section 48A.2,
subsection 3 .
Sec. 64. Section 321.1A, subsection 1, paragraph a, Code
2023, is amended to read as follows:
a. The person has filed for a homestead tax exemption and
credit on property in this state.
Sec. 65. Section 331.401, subsection 1, paragraphs e and f,
Code 2023, are amended to read as follows:
e. Adopt resolutions authorizing the county assessor
to provide forms for homestead tax exemption and credit
claimants as provided in section 425.2 and military service tax
exemptions as provided in section 426A.14 .
f. Examine and allow or disallow claims for homestead tax
exemption and credit in accordance with section 425.3 and
claims for military service tax exemption in accordance with
chapter 426A . The board, by a single resolution, may allow or
disallow the exemptions recommended by the assessor.
Sec. 66. Section 331.512, subsection 3, Code 2023, is
amended to read as follows:
3. Carry out duties relating to the homestead tax exemption
and credit and agricultural land tax credit as provided in
chapters 425 and 426 .
Sec. 67. Section 331.559, subsection 12, Code 2023, is
amended to read as follows:
12. Carry out duties relating to the administration of
the homestead tax exemption and credit and other credits as
provided in sections 425.4 , 425.5 , 425.7 , 425.9 , 425.10 , and
425.25 .
Sec. 68. Section 404.3, subsection 1, Code 2023, is amended
to read as follows:
1. All qualified real estate assessed as residential
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property is eligible to receive an exemption from taxation
based on the actual value added by the improvements. The
exemption is for a period of ten years. The amount of the
exemption is equal to a percent of the actual value added by
the improvements, determined as follows: One hundred fifteen
percent of the value added by the improvements. However, the
amount of the actual value added by the improvements which
shall be used to compute the exemption shall not exceed twenty
thousand dollars and the granting of the exemption shall not
result in the actual value of the qualified real estate being
reduced below the actual value on which the homestead credit
exemption is computed under section 425.1 .
Sec. 69. Section 425.1, subsection 1, paragraph a, Code
2023, is amended to read as follows:
a. A homestead credit fund is created. There For fiscal
years beginning before July 1, 2028, there is appropriated
annually from the general fund of the state to the department
of revenue to be credited to the homestead credit fund, an
amount sufficient to implement this subchapter .
Sec. 70. Section 425.1, subsection 1, Code 2023, is amended
by adding the following new paragraph:
NEW PARAGRAPH . c. All moneys in the homestead credit fund
at the end of the fiscal year beginning July 1, 2028, shall be
transferred by the department of revenue for deposit in the
general fund of the state.
Sec. 71. Section 425.1, subsections 2, 4, and 5, Code 2023,
are amended to read as follows:
2. a. For fiscal years beginning before July 1, 2028, the
moneys in the homestead credit fund shall be apportioned each
year so as to give a credit against the tax on each eligible
homestead in the state, but not more than the amount under
paragraph “b” .
b. (1) The For assessment years beginning before July
1, 2025, the homestead credit fund shall be apportioned each
year so as to give a credit against the tax on each eligible
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homestead in the state in an amount equal to the actual levy on
the first four thousand eight hundred fifty dollars of actual
value for each homestead.
(2) For property taxes due and payable in the fiscal year
beginning July 1, 2025, the homestead credit fund shall be
apportioned each year so as to give a credit against the tax
on each eligible homestead in the state in an amount equal
to the actual levy on the first three thousand six hundred
forty dollars of actual value for each homestead exempted under
section 425.1A.
(3) For property taxes due and payable in the fiscal year
beginning July 1, 2026, the homestead credit fund shall be
apportioned each year so as to give a credit against the tax
on each eligible homestead in the state in an amount equal to
the actual levy on the first two thousand four hundred thirty
dollars of actual value for each homestead exempted under
section 425.1A.
(4) For property taxes due and payable in the fiscal year
beginning July 1, 2027, the homestead credit fund shall be
apportioned each year so as to give a credit against the tax
on each eligible homestead in the state in an amount equal to
the actual levy on the first one thousand two hundred twenty
dollars of actual value for each homestead exempted under
section 425.1A.
4. Annually For fiscal years beginning before July 1, 2028,
annually the department of revenue shall certify to the county
auditor of each county the credit and its amount in dollars.
Each county auditor shall then enter the credit against the
tax levied on each eligible homestead in each county payable
during the ensuing year, designating on the tax lists the
credit as being from the homestead credit fund, and credit
shall then be given to the several taxing districts in which
eligible homesteads are located in an amount equal to the
credits allowed on the taxes of the homesteads. The amount of
credits shall be apportioned by each county treasurer to the
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several taxing districts as provided by law, in the same manner
as though the amount of the credit had been paid by the owners
of the homesteads. However, the several taxing districts shall
not draw the funds so credited until after the semiannual
allocations have been received by the county treasurer, as
provided in this subchapter . Each county treasurer shall show
on each tax receipt the amount of credit received from the
homestead credit fund.
5. If For property taxes due and payable in fiscal years
beginning before July 1, 2028, if the homestead tax credit
computed under this section is less than sixty-two dollars
and fifty cents, the amount of homestead tax credit on that
eligible homestead shall be sixty-two dollars and fifty cents
subject to the limitation imposed in this section .
Sec. 72. NEW SECTION . 425.1A Homestead tax exemption.
The following exemptions from taxation shall be allowed:
1. For the assessment year beginning January 1, 2024, the
eligible homestead, not to exceed two thousand five hundred
dollars in actual value.
2. For the assessment year beginning January 1, 2025, the
eligible homestead, not to exceed five thousand dollars in
actual value.
3. For the assessment year beginning January 1, 2026, the
eligible homestead, not to exceed seven thousand five hundred
dollars in actual value.
4. For the assessment year beginning January 1, 2027, and
each succeeding assessment year, the eligible homestead, not to
exceed ten thousand dollars in actual value.
Sec. 73. Section 425.2, subsections 1, 2, 4, and 5, Code
2023, are amended to read as follows:
1. A person who wishes to qualify for the homestead
exemption and credit allowed under this subchapter shall
obtain the appropriate forms for filing for the exemption and
credit from the assessor. The person claiming the exemption
and credit shall file a verified statement and designation of
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homestead with the assessor for the year for which the person
is first claiming the exemption and credit. The claim shall be
filed not later than July 1 of the year for which the person is
claiming the exemption and credit. A claim filed after July 1
of the year for which the person is claiming the exemption and
credit shall be considered as a claim filed for the following
year.
2. Upon the filing and allowance of the claim, the claim
shall be allowed on that homestead for successive years without
further filing as long as the property is legally or equitably
owned and used as a homestead by that person or that person’s
spouse on July 1 of each of those successive years, and the
owner of the property being claimed as a homestead declares
residency in Iowa for purposes of income taxation, and the
property is occupied by that person or that person’s spouse
for at least six months in each of those calendar years in
which the fiscal year begins. When the property is sold or
transferred, the buyer or transferee who wishes to qualify
shall refile for the exemption and credit. However, when the
property is transferred as part of a distribution made pursuant
to chapter 598 , the transferee who is the spouse retaining
ownership of the property is not required to refile for the
exemption and credit. Property divided pursuant to chapter 598
shall not be modified following the division of the property.
An owner who ceases to use a property for a homestead or
intends not to use it as a homestead for at least six months in
a calendar year shall provide written notice to the assessor
by July 1 following the date on which the use is changed. A
person who sells or transfers a homestead or the personal
representative of a deceased person who had a homestead at the
time of death, shall provide written notice to the assessor
that the property is no longer the homestead of the former
claimant.
4. Any person sixty-five years of age or older or any person
who is disabled may request, in writing, from the appropriate
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assessor forms for filing for homestead tax exemption and
credit. Any person sixty-five years of age or older or who is
disabled may complete the form, which shall include a statement
of homestead, and mail or return it to the appropriate
assessor. The signature of the claimant on the statement shall
be considered the claimant’s acknowledgment that all statements
and facts entered on the form are correct to the best of the
claimant’s knowledge.
5. Upon adoption of a resolution by the county board of
supervisors, any person may request, in writing, from the
appropriate assessor forms for the filing for homestead tax
exemption and credit. The person may complete the form, which
shall include a statement of homestead, and mail or return it
to the appropriate assessor. The signature of the claimant on
the statement of homestead shall be considered the claimant’s
acknowledgment that all statements and facts entered on the
form are correct to the best of the claimant’s knowledge.
Sec. 74. Section 425.3, subsection 4, Code 2023, is amended
to read as follows:
4. The county auditor shall forward the claims to the board
of supervisors. The board shall allow or disallow the claims.
If the board disallows a claim, it shall send written notice,
by mail, to the claimant at the claimant’s last known address.
The notice shall state the reasons for disallowing the claim
for the credit . The board is not required to send notice that
a claim is disallowed if the claimant voluntarily withdraws the
claim.
Sec. 75. Section 425.4, Code 2023, is amended to read as
follows:
425.4 Certification to treasurer.
All claims which have been allowed by the board of
supervisors shall be certified on or before August 1, in each
year, by the county auditor to the county treasurer, which
certificates shall list the total amount of dollars, listed by
taxing district in the county, due for homestead tax exemptions
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and credits claimed and allowed. The county treasurer shall
forthwith then certify to the department of revenue the total
amount of dollars, listed by taxing district in the county, due
for homestead tax exemptions and credits claimed and allowed.
Sec. 76. Section 425.6, Code 2023, is amended to read as
follows:
425.6 Waiver by neglect.
If a person fails to file a claim or to have a claim on file
with the assessor for the credits provided in this subchapter ,
the person is deemed to have waived the homestead exemption
and credit for the year in which the person failed to file the
claim or to have a claim on file with the assessor.
Sec. 77. Section 425.7, subsection 3, Code 2023, is amended
to read as follows:
3. a. If the department of revenue determines that a claim
for homestead exemption and credit has been allowed by the
board of supervisors which is not justifiable under the law
and not substantiated by proper facts, the department may, at
any time within thirty-six months from July 1 of the year in
which the claim is allowed, set aside the allowance. Notice
of the disallowance shall be given to the county auditor of
the county in which the claim has been improperly granted and
a written notice of the disallowance shall also be addressed
to the claimant at the claimant’s last known address. The
claimant or board of supervisors may appeal to the director
of revenue within thirty days from the date of the notice of
disallowance. The director shall grant a hearing and if, upon
the hearing, the director determines that the disallowance was
incorrect, the director shall set aside the disallowance. The
director shall notify the claimant and the board of supervisors
of the result of the hearing. The claimant or the board of
supervisors may seek judicial review of the action of the
director of revenue in accordance with chapter 17A .
b. If a claim is disallowed by the department of revenue
and not appealed to the director of revenue or appealed to
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the director of revenue and thereafter upheld upon final
resolution, including any judicial review, any amounts of
exemptions allowed and credits allowed and paid from the
homestead credit fund including the penalty, if any, become a
lien upon the property on which the exemption and credit was
originally granted, if still in the hands of the claimant,
and not in the hands of a bona fide purchaser, and any amount
so erroneously paid including the penalty, if any, shall be
collected by the county treasurer in the same manner as other
taxes and the collections shall be returned to the department
of revenue and credited to the homestead credit fund. The
director of revenue may institute legal proceedings against a
homestead credit claimant for the collection of payments made
on disallowed credits and the penalty, if any. If a person
makes a false claim or affidavit with fraudulent intent to
obtain the homestead exemption and credit, the person is guilty
of a fraudulent practice and the claim shall be disallowed in
full. If the credit has been paid, the amount of the credit
plus a penalty equal to twenty-five percent of the amount of
credit plus interest, at the rate in effect under section
421.7 , from the time of payment shall be collected by the
county treasurer in the same manner as other property taxes,
penalty, and interest are collected and when collected shall
be paid to the director of revenue. If a homestead exemption
and credit is disallowed and the claimant failed to give
written notice to the assessor as required by section 425.2
when the property ceased to be used as a homestead by the
claimant, a civil penalty equal to five percent of the amount
of the disallowed exemption or credit is assessed against the
claimant.
Sec. 78. Section 425.8, subsection 1, Code 2023, is amended
to read as follows:
1. The director of revenue shall prescribe the form
for the making of a verified statement and designation of
homestead, the form for the supporting affidavits required
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herein, and such other forms as may be necessary for the proper
administration of this subchapter . Whenever necessary, the
department of revenue shall forward to the county auditors of
the several counties in the state the prescribed sample forms,
and the county auditors shall furnish blank forms prepared
in accordance therewith with the assessment rolls, books,
and supplies delivered to the assessors. The department of
revenue shall prescribe and the county auditors shall provide
on the forms for claiming the homestead exemption and credit a
statement to the effect that the owner realizes that the owner
must give written notice to the assessor when the owner changes
the use of the property.
Sec. 79. Section 425.9, subsections 2, 3, and 4, Code 2023,
are amended to read as follows:
2. If any claim for exemption and credit made hereunder
has been denied by the board of supervisors, and such action
is subsequently reversed on appeal, the exemption and credit
shall be allowed on the homestead involved in said appeal, and
the director of revenue, the county auditor, and the county
treasurer shall make such exemption and credit and change their
books and records accordingly.
3. In the event the appealing taxpayer has paid one or both
of the installments of the tax payable in the year or years in
question on such homestead valuation, remittance shall be made
to such taxpayer of the amount of such credit or exemption .
4. The amount of such credit shall be allocated and paid
from the surplus redeposited in the homestead credit fund
provided for in subsection 1 . The amount of such exemption not
covered by the credit shall be allowed as a credit on future
taxes due and payable.
Sec. 80. Section 425.10, Code 2023, is amended to read as
follows:
425.10 Reversal of allowed claim.
In the event any claim is allowed, and subsequently reversed
on appeal, any exemption and credit made under the claim
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shall be void. The amount of the erroneous exemption and
credit shall be charged against the property in question, and
the director of revenue, the county auditor, and the county
treasurer are authorized and directed to correct their books
and records accordingly. The amount of the erroneous credit,
when collected, shall be returned by the county treasurer to
the homestead credit fund to be reallocated the following year
as provided in this subchapter .
Sec. 81. Section 425.11, subsection 1, paragraph d,
subparagraph (1), unnumbered paragraph 1, Code 2023, is amended
to read as follows:
The homestead includes the dwelling house which the owner,
in good faith, is occupying as a home on July 1 of the year for
which the exemption and credit is claimed and occupies as a
home for at least six months during the calendar year in which
the fiscal year begins, except as otherwise provided.
Sec. 82. Section 425.11, subsection 1, paragraph d,
subparagraph (3), Code 2023, is amended to read as follows:
(3) It must not embrace more than one dwelling house, but
where a homestead has more than one dwelling house situated
thereon, the exemption and credit provided for in this
subchapter shall apply to the home and buildings used by the
owner, but shall not apply to any other dwelling house and
buildings appurtenant.
Sec. 83. Section 425.11, subsection 1, paragraph e, Code
2023, is amended to read as follows:
e. “Owner” means the person who holds the fee simple
title to the homestead, and in addition shall mean the person
occupying as a surviving spouse or the person occupying under
a contract of purchase which contract has been recorded in
the office of the county recorder of the county in which the
property is located; or the person occupying the homestead
under devise or by operation of the inheritance laws where
the whole interest passes or where the divided interest is
shared only by persons related or formerly related to each
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other by blood, marriage or adoption; or the person occupying
the homestead is a shareholder of a family farm corporation
that owns the property; or the person occupying the homestead
under a deed which conveys a divided interest where the divided
interest is shared only by persons related or formerly related
to each other by blood, marriage or adoption; or where the
person occupying the homestead holds a life estate with the
reversion interest held by a nonprofit corporation organized
under chapter 504 , provided that the holder of the life estate
is liable for and pays property tax on the homestead; or where
the person occupying the homestead holds an interest in a
horizontal property regime under chapter 499B , regardless
of whether the underlying land committed to the horizontal
property regime is in fee or as a leasehold interest, provided
that the holder of the interest in the horizontal property
regime is liable for and pays property tax on the homestead;
or where the person occupying the homestead is a member of a
community land trust as defined in 42 U.S.C. §12773, regardless
of whether the underlying land is in fee or as a leasehold
interest, provided that the member of the community land trust
is occupying the homestead and is liable for and pays property
tax on the homestead. For the purpose of this subchapter ,
the word “owner” shall be construed to mean a bona fide owner
and not one for the purpose only of availing the person of
the benefits of this subchapter . In order to qualify for the
homestead tax exemption and credit, evidence of ownership shall
be on file in the office of the clerk of the district court
or recorded in the office of the county recorder at the time
the owner files with the assessor a verified statement of the
homestead claimed by the owner as provided in section 425.2 .
Sec. 84. Section 425.12, Code 2023, is amended to read as
follows:
425.12 Indian land.
Each forty acres of land, or fraction thereof, occupied by
a member or members of the Sac and Fox Indians in Tama county,
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which land is held in trust by the secretary of the interior of
the United States for said Indians, shall be given a homestead
tax exemption and credit within the meaning and under the
provisions of this subchapter . Application for such homestead
tax exemption and credit shall be made to the county auditor of
Tama county and may be made by a representative of the tribal
council.
Sec. 85. Section 425.13, Code 2023, is amended to read as
follows:
425.13 Conspiracy to defraud.
If any two or more persons conspire and confederate together
with fraudulent intent to obtain the exemption and credit
provided for under the terms of this subchapter by making a
false deed, or a false contract of purchase, they are guilty of
a fraudulent practice.
Sec. 86. Section 425.15, subsection 1, unnumbered paragraph
1, Code 2023, is amended to read as follows:
If the owner of a homestead allowed a an exemption and credit
under this subchapter is any of the following, the exemption
shall be the total actual value of the homestead and, for
fiscal years for which credits are paid, the credit allowed
on the homestead from the homestead credit fund shall be the
entire amount of the tax levied on the homestead:
Sec. 87. Section 425.15, subsections 2, 3, and 4, Code 2023,
are amended to read as follows:
2. a. For an owner described in subsection 1 , paragraph
“a” , “b” , or “c” , the exemption and credit allowed shall be
continued to the estate of an owner who is deceased or the
surviving spouse and any child, as defined in section 234.1 ,
who are the beneficiaries of a deceased owner, so long as the
surviving spouse remains unmarried.
b. An individual described in subsection 1 , paragraph
“d” , is no longer eligible for the exemption and credit upon
termination of dependency and indemnity compensation under 38
U.S.C. §1301 et seq.
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3. An owner or a beneficiary of an owner who elects to
secure the exemption and credit provided in this section is not
eligible for any other real property tax exemption provided by
law for veterans of military service.
4. If an owner acquires a different homestead, the exemption
and credit allowed under this section may be claimed on the new
homestead unless the owner fails to meet the other requirements
of this section .
Sec. 88. Section 425.15, subsection 5, paragraph a, Code
2023, is amended to read as follows:
a. Except as provided in paragraph “b” , the list of the
names and addresses of individuals allowed a an exemption
and credit under this section and maintained by the county
recorder, county treasurer, county assessor, city assessor, or
other government body is confidential information and shall
not be disseminated to any person unless otherwise ordered by
a court or released by the lawful custodian of the records
pursuant to state or federal law. The county recorder, county
treasurer, county assessor, city assessor, or other government
body responsible for maintaining the names and addresses of
individuals allowed a an exemption and credit under this
section may display such exemption and credit on individual
paper records and individual electronic records, including
display on an internet site.
Sec. 89. Section 425.17, subsection 8, Code 2023, is amended
to read as follows:
8. “Property taxes due” means property taxes including any
special assessments, but exclusive of delinquent interest and
charges for services, due on a claimant’s homestead in this
state, but includes only property taxes for which the claimant
is liable and which will actually be paid by the claimant.
However, if the claimant is a person whose property taxes have
been suspended under sections 427.8 and 427.9 , “property taxes
due” means property taxes including any special assessments,
but exclusive of delinquent interest and charges for services,
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due on a claimant’s homestead in this state, but includes only
property taxes for which the claimant is liable and which
would have to be paid by the claimant if the payment of the
taxes has not been suspended pursuant to sections 427.8 and
427.9 . “Property taxes due” shall be computed with no deduction
for any credit under this subchapter or for any homestead
exemption or credit allowed under section 425.1 . Each claim
shall be based upon the taxes due during the fiscal year next
following the base year. If a homestead is owned by two or
more persons as joint tenants or tenants in common, and one or
more persons are not members of claimant’s household, “property
taxes due” is that part of property taxes due on the homestead
which equals the ownership percentage of the claimant and the
claimant’s household. The county treasurer shall include with
the tax receipt a statement that if the owner of the property
is eighteen years of age or over, the person may be eligible
for the credit allowed under this subchapter . If a homestead
is an integral part of a farm, the claimant may use the total
property taxes due for the larger unit. If a homestead is an
integral part of a multidwelling or multipurpose building the
property taxes due for the purpose of this subsection shall be
prorated to reflect the portion which the value of the property
that the household occupies as its homestead is to the value
of the entire structure. For purposes of this subsection ,
“unit” refers to that parcel of property covered by a single tax
statement of which the homestead is a part.
Sec. 90. Section 425.23, subsection 2, Code 2023, is amended
to read as follows:
2. The actual credit for property taxes due shall be
determined by subtracting from the tentative credit the amount
of the tax reduction resulting from the homestead exemption
and credit under section sections 425.1 which is allowed
as a credit and 425.1A against property taxes due in the
fiscal year next following the base year by the claimant or
any person of the claimant’s household. If the subtraction
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produces a negative amount, there shall be no credit but
no refund shall be required. The actual reimbursement for
rent constituting property taxes paid shall be equal to the
tentative reimbursement.
Sec. 91. Section 435.26, subsection 1, paragraph a, Code
2023, is amended to read as follows:
a. A mobile home or manufactured home which is located
outside a manufactured home community or mobile home park shall
be converted to real estate by being placed on a permanent
foundation and shall be assessed for real estate taxes. A
home, after conversion to real estate, is eligible for the
homestead tax exemption and credit and the military service tax
exemption as provided in sections 425.2 and 426A.11 . A taxable
mobile home or manufactured home which is located outside
of a manufactured home community or mobile home park as of
January 1, 1995, is also exempt from the permanent foundation
requirements of this chapter until the home is relocated.
Sec. 92. Section 435.26A, subsection 3, Code 2023, is
amended to read as follows:
3. After the surrender of a manufactured home’s certificate
of title under this section , the manufactured home shall
continue to be taxed under section 435.22 and is not eligible
for the homestead tax exemption and credit or the military
service tax exemption and credit . A foreclosure action on a
manufactured home whose title has been surrendered under this
section shall be conducted as a real estate foreclosure. A tax
lien and its priority shall remain the same on a manufactured
home after its certificate of title has been surrendered.
Sec. 93. Section 483A.24, subsection 19, Code 2023, is
amended to read as follows:
19. Upon payment of a fee established by rules adopted
pursuant to section 483A.1 for a lifetime trout fishing
license, the department shall issue a lifetime trout fishing
license to a person who is at least sixty-five years of age or
to a person who qualifies for the disabled veteran homestead
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exemption and credit under section 425.15 . The department
shall prepare an application to be used by a person requesting
a lifetime trout fishing license under this subsection .
Sec. 94. Section 499A.14, Code 2023, is amended to read as
follows:
499A.14 Taxation.
The real estate shall be taxed in the name of the
cooperative, and each member of the cooperative shall pay
that member’s proportionate share of the tax in accordance
with the proration formula set forth in the bylaws, and each
member occupying an apartment as a residence shall receive
that member’s proportionate homestead tax exemption and credit
and each veteran of the military services of the United States
identified as such under the laws of the state of Iowa or the
United States shall receive as a credit that member’s veterans
tax benefit as prescribed by the laws of the state of Iowa.
Sec. 95. EXISTING HOMESTEAD CLAIMS. Homestead credit
claims approved under chapter 425, subchapter I, prior to and
valid on the effective date of this division of this Act shall
result in a homestead exemption under chapter 425, subchapter
I, as enacted in this division of this Act, without further
filing by the claimant.
Sec. 96. IMPLEMENTATION. Section 25B.7, subsection 1,
shall not apply to the property tax exemption provided in this
division of this Act.
Sec. 97. APPLICABILITY. This division of this Act applies
to assessment years beginning on or after January 1, 2024.
DIVISION V
ELDERLY PROPERTY TAX CREDIT
Sec. 98. Section 425.17, subsection 2, paragraph a,
subparagraph (3), Code 2023, is amended to read as follows:
(3) A person filing a claim for credit under this subchapter
who has attained the age of seventy years on or before December
31 of the base year, who has a household income of less than two
three hundred fifty percent of the federal poverty level, as
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defined by the most recently revised poverty income guidelines
published by the United States department of health and human
services, and is domiciled in this state at the time the claim
is filed or at the time of the person’s death in the case of a
claim filed by the executor or administrator of the claimant’s
estate.
Sec. 99. Section 425.23, subsection 1, paragraph c,
subparagraph (2), Code 2023, is amended to read as follows:
(2) The difference between the actual amount of net
property taxes due on the homestead during the fiscal year next
following the base year minus the actual amount of net property
taxes due on the homestead during the first fiscal year for
which the claimant filed a claim for a credit calculated under
this paragraph “c” and for which the property taxes due on the
homestead were calculated on an assessed valuation that was
not a partial assessment and if the claimant has filed for the
credit calculated under this paragraph “c” for each of the
subsequent fiscal years after the first credit claimed.
Sec. 100. Section 425.23, subsection 2, Code 2023, is
amended to read as follows:
2. a. The Except as provided in paragraph “b” , the
actual credit for property taxes due shall be determined
by subtracting from the tentative credit the amount of the
homestead credit under section 425.1 which is allowed as a
credit against property taxes due in the fiscal year next
following the base year by the claimant or any person of
the claimant’s household. If the subtraction produces a
negative amount, there shall be no credit but no refund shall
be required. The actual reimbursement for rent constituting
property taxes paid shall be equal to the tentative
reimbursement.
b. If the claimant’s tentative credit is the amount
determined under subsection 1, paragraph “c” , subparagraph (2),
the actual credit amount shall be equal to the tentative credit
amount.
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Sec. 101. EFFECTIVE DATE. The following, being deemed of
immediate importance, take effect upon enactment:
1. The section of this division of this Act amending section
423.23, subsection 1, paragraph “c”, subparagraph (2).
2. The section of this division of this Act amending section
423.23, subsection 2.
Sec. 102. RETROACTIVE APPLICABILITY. The following apply
retroactively to claims under chapter 425, subchapter II, filed
on or after January 1, 2022:
1. The section of this division of this Act amending section
423.25, subsection 1, paragraph “c”, subparagraph (2).
2. The section of this division of this Act amending section
423.23, subsection 2.
Sec. 103. APPLICABILITY. The section of this division
of this Act amending section 425.17, subsection 2, paragraph
“a”, subparagraph (3), applies to claims under chapter 425,
subchapter II, filed on or after January 1, 2024.
DIVISION VI
MILITARY SERVICE PROPERTY TAX EXEMPTION AND CREDIT
Sec. 104. Section 25B.7, subsection 2, paragraph c, Code
2023, is amended by striking the paragraph.
Sec. 105. Section 426A.1A, Code 2023, is amended to read as
follows:
426A.1A Appropriation.
There For each fiscal year beginning before July 1, 2026,
there is appropriated from the general fund of the state the
amounts necessary to fund the credits provided under this
chapter .
Sec. 106. Section 426A.2, Code 2023, is amended to read as
follows:
426A.2 Military service tax credit.
The For each fiscal year beginning before July 1, 2026, the
moneys appropriated under section 426A.1A shall be apportioned
each year so as to replace all or a portion of the tax which
would be due on property eligible for military service tax
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exemption in the state, if the property were subject to
taxation, the amount of the credit to be not more than six
dollars and ninety-two cents per thousand dollars of assessed
value of property , not to exceed nine hundred forty-five
dollars, which would be subject to the tax, except for the
military service tax exemption.
Sec. 107. Section 426A.11, subsections 1 and 2, Code 2023,
are amended to read as follows:
1. The property, not to exceed two thousand seven hundred
seventy-eight dollars in taxable value for assessment years
beginning before January 1, 2024 , of any veteran, as defined in
section 35.1 , of World War I.
2. a. The property, not to exceed one thousand eight
hundred fifty-two dollars in taxable value for assessment years
beginning before January 1, 2024 , of an honorably separated,
retired, furloughed to a reserve, placed on inactive status,
or discharged veteran, as defined in section 35.1, subsection
2 , paragraph “a” or “b” .
b. The property, not to exceed two thousand fifty-five
dollars in taxable value for the assessment year beginning
January 1, 2024, of an honorably separated, retired, furloughed
to a reserve, placed on inactive status, or discharged veteran,
as defined in section 35.1, subsection 2, paragraph “a” or “b” .
c. The property, not to exceed four thousand dollars in
taxable value for assessment years beginning on or after
January 1, 2025, of an honorably separated, retired, furloughed
to a reserve, placed on inactive status, or discharged veteran,
as defined in section 35.1, subsection 2, paragraph “a” or “b” .
Sec. 108. IMPLEMENTATION. Section 25B.7, subsection 1,
shall not apply to the property tax exemption provided in this
Act.
Sec. 109. APPLICABILITY. This division of this Act applies
to assessment years beginning on or after January 1, 2024.
DIVISION VII
PROPERTY TAX ASSESSMENT LIMITATIONS
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Sec. 110. Section 441.21, subsections 5, 9, and 10, Code
2023, are amended to read as follows:
5. a. (1) For valuations established as of January 1,
1979, property valued by the department of revenue pursuant
to chapters 428 , 433 , and 437 , and 438 shall be considered as
one class of property and shall be assessed as a percentage
of its actual value. The percentage shall be determined by
the director of revenue in accordance with the provisions of
this section . For valuations established as of January 1,
1979, the percentage shall be the quotient of the dividend and
divisor as defined in this section . The dividend shall be the
total actual valuation established for 1978 by the department
of revenue, plus ten percent of the amount so determined.
The divisor for property valued by the department of revenue
pursuant to chapters 428 , 433 , and 437 , and 438 shall be the
valuation established for 1978, plus the amount of value added
to the total actual value by the revaluation of the property
by the department of revenue as of January 1, 1979. For
valuations established as of January 1, 1980, property valued
by the department of revenue pursuant to chapters 428 , 433 , and
437 , and 438 shall be assessed at a percentage of its actual
value. The percentage shall be determined by the director of
revenue in accordance with the provisions of this section . For
valuations established as of January 1, 1980, the percentage
shall be the quotient of the dividend and divisor as defined in
this section . The dividend shall be the total actual valuation
established for 1979 by the department of revenue, plus eight
percent of the amount so determined. The divisor for property
valued by the department of revenue pursuant to chapters 428 ,
433 , and 437 , and 438 shall be the valuation established for
1979, plus the amount of value added to the total actual
value by the revaluation of the property by the department of
revenue as of January 1, 1980. For valuations established
as of January 1, 1981, and each year thereafter beginning
before January 1, 2025 , the percentage of actual value at
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which property valued by the department of revenue pursuant to
chapters 428 , 433 , and 437 , and 438 shall be assessed shall
be calculated in accordance with the methods provided herein,
except that any references to ten percent in this subsection
shall be eight percent. For valuations established on or after
January 1, 2013, property valued by the department of revenue
pursuant to chapter 434 shall be assessed at a portion of its
actual value determined in the same manner at which property
assessed as commercial property is assessed under paragraph “b”
for the same assessment year. For valuations established for
the assessment year beginning January 1, 2025, the percentage
of actual value at which property valued by the department of
revenue pursuant to chapter 438 shall be assessed shall be
ninety-five percent. For valuations established for assessment
years beginning on or after January 1, 2026, the percentage
of actual value at which property valued by the department of
revenue pursuant to chapter 438 shall be assessed shall be
ninety percent.
(2) (a) For valuations established for the assessment year
beginning January 1, 2025, the percentage of actual value at
which property valued by the department of revenue pursuant to
chapters 428 and 437 shall be assessed shall be ninety-seven
and one-half percent.
(b) For valuations established for the assessment year
beginning January 1, 2026, the percentage of actual value at
which property valued by the department of revenue pursuant to
chapters 428 and 437 shall be assessed shall be ninety-five
percent.
(c) For valuations established for the assessment year
beginning January 1, 2027, the percentage of actual value at
which property valued by the department of revenue pursuant to
chapters 428 and 437 shall be assessed shall be ninety-two and
one-half percent.
(d) For valuations established for the assessment year
beginning January 1, 2028, and each assessment year thereafter,
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the percentage of actual value at which property valued by the
department of revenue pursuant to chapters 428 and 437 shall be
assessed shall be ninety percent.
b. For valuations established on or after January 1, 2013,
commercial property, excluding properties referred to in
section 427A.1, subsection 9 , shall be assessed at a portion
of its actual value, as determined in this paragraph “b” . For
valuations established on or after January 1, 2013, property
valued by the department of revenue pursuant to chapter 434
shall be assessed at a portion of its actual value determined
in the same manner at which property assessed as commercial
property is assessed for the same assessment year.
(1) For valuations established for the assessment year
beginning January 1, 2013, the percentage of actual value
as equalized by the department of revenue as provided in
section 441.49 at which commercial property shall be assessed
shall be ninety-five percent. For valuations established
for the assessment year beginning January 1, 2014, and each
assessment year thereafter beginning before January 1, 2022,
the percentage of actual value as equalized by the department
of revenue as provided in section 441.49 at which commercial
property shall be assessed shall be ninety percent.
(2) For valuations established for the assessment year
beginning January 1, 2022, and each assessment year thereafter,
the portion of actual value at which each property unit of
commercial property shall be assessed shall be the sum of the
following:
(a) An amount equal to the product of the assessment
limitation percentage applicable to residential property under
subsection 4 for that assessment year multiplied by the actual
value of the property that exceeds zero dollars but does not
exceed one hundred fifty thousand dollars.
(b) (i) An For the assessment years beginning January 1,
2022, January 1, 2023, and January 1, 2024, an amount equal
to ninety percent of the actual value of the property for
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that assessment year that exceeds one hundred fifty thousand
dollars.
(ii) For the assessment year beginning January 1, 2025,
an amount equal to eighty-five percent of the actual value of
the property for that assessment year that exceeds one hundred
fifty thousand dollars.
(iii) For the assessment year beginning January 1, 2026,
and each assessment year thereafter, an amount equal to eighty
percent of the actual value of the property for that assessment
year that exceeds one hundred fifty thousand dollars.
c. For valuations established on or after January 1, 2013,
industrial property, excluding properties referred to in
section 427A.1, subsection 9 , shall be assessed at a portion of
its actual value, as determined in this paragraph “c” .
(1) For valuations established for the assessment year
beginning January 1, 2013, the percentage of actual value
as equalized by the department of revenue as provided in
section 441.49 at which industrial property shall be assessed
shall be ninety-five percent. For valuations established
for the assessment year beginning January 1, 2014, and each
assessment year thereafter beginning before January 1, 2022,
the percentage of actual value as equalized by the department
of revenue as provided in section 441.49 at which industrial
property shall be assessed shall be ninety percent.
(2) For valuations established for the assessment year
beginning January 1, 2022, and each assessment year thereafter,
the portion of actual value at which each property unit of
industrial property shall be assessed shall be the sum of the
following:
(a) An amount equal to the product of the assessment
limitation percentage applicable to residential property under
subsection 4 for that assessment year multiplied by the actual
value of the property that exceeds zero dollars but does not
exceed one hundred fifty thousand dollars.
(b) (i) An For the assessment years beginning January 1,
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2022, January 1, 2023, and January 1, 2024, an amount equal
to ninety percent of the actual value of the property for
that assessment year that exceeds one hundred fifty thousand
dollars.
(ii) For the assessment year beginning January 1, 2025,
an amount equal to eighty-five percent of the actual value of
the property for that assessment year that exceeds one hundred
fifty thousand dollars.
(iii) For the assessment year beginning January 1, 2026,
and each assessment year thereafter, an amount equal to eighty
percent of the actual value of the property for that assessment
year that exceeds one hundred fifty thousand dollars.
d. For valuations established for the assessment year
beginning January 1, 2019, and each assessment year thereafter,
the percentages or portions of actual value at which property
is assessed, as determined under this subsection , shall not be
applied to the value of wind energy conversion property valued
under section 427B.26 the construction of which is approved by
the Iowa utilities board on or after July 1, 2018.
e. (1) For each fiscal year beginning on or after July 1,
2023, there is appropriated from the general fund of the state
to the department of revenue the sum of one hundred twenty-five
million dollars to be used for payments under this paragraph
calculated as a result of the assessment limitations imposed
under paragraph “b” , subparagraph (2), subparagraph division
(a), and paragraph “c” , subparagraph (2), subparagraph division
(a).
(2) For fiscal years beginning on or after July 1, 2023,
each county treasurer shall be paid by the department of
revenue an amount calculated under subparagraph (4). If an
amount appropriated for the fiscal year is insufficient to make
all payments as calculated under subparagraph (4), the director
of revenue shall prorate the payments to the county treasurers
and shall notify the county auditors of the pro rata percentage
on or before September 30.
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(3) On or before July 1 of each fiscal year, the assessor
shall report to the county auditor that portion of the total
actual value of all commercial property and industrial property
in the county that is subject to the assessment limitations
imposed under paragraph “b” , subparagraph (2), subparagraph
division (a), and paragraph “c” , subparagraph (2), subparagraph
division (a), for the assessment year used to calculate the
taxes due and payable in that fiscal year.
(4) On or before September 1 of each fiscal year, the county
auditor shall prepare a statement, based on the report received
in subparagraph (3) and information transmitted to the county
auditor under chapter 434 , listing for each taxing district in
the county:
(a) The product of the portion of the total actual value
of all commercial property, industrial property, and property
valued by the department under chapter 434 in the county
that is subject to the assessment limitations imposed under
paragraph “b” , subparagraph (2), subparagraph division (a),
and paragraph “c” , subparagraph (2), subparagraph division
(a), for the applicable assessment year used to calculate
taxes which are due and payable in the applicable fiscal year
multiplied by the difference, stated as a percentage, between
ninety percent the percentage under paragraph “b” , subparagraph
(2), subparagraph division (b), for the applicable assessment
year and the assessment limitation percentage applicable to
residential property under subsection 4 for the applicable
assessment year.
(b) The tax levy rate per one thousand dollars of assessed
value for each taxing district for the applicable fiscal year.
(c) The amount of the payment for each county is equal to
the amount determined pursuant to subparagraph division (a),
multiplied by the tax rate specified in subparagraph division
(b), and then divided by one thousand dollars.
(5) The county auditor shall certify and forward one copy of
the statement described in subparagraph (4) to the department
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of revenue not later than September 1 of each fiscal year.
(6) The amounts determined under this paragraph shall
be paid by the department to the county treasurers in equal
installments in September and March of each year. The county
treasurer shall apportion the payments among the eligible
taxing districts in the county and the amounts received by each
taxing authority shall be treated the same as property taxes
paid.
f. For the purposes of this subsection , unless the context
otherwise requires:
(1) “Contiguous parcels” means any of the following:
(a) Parcels that share a common boundary.
(b) Parcels within the same building or structure
regardless of whether the parcels share a common boundary.
(c) Permanent improvements to the land that are situated
on one or more parcels of land that are assessed and taxed
separately from the permanent improvements if the parcels of
land upon which the permanent improvements are situated share
a common boundary.
(2) “Parcel” means the same as defined in section 445.1 .
“Parcel” also means that portion of a parcel assigned a
classification of commercial property or industrial property
pursuant to section 441.21, subsection 14 , paragraph “b” .
(3) “Property unit” means a parcel or contiguous parcels
all of which are located within the same county, with the same
property tax classification, are owned by the same person, and
are operated by that person for a common use and purpose.
9. Not later than November 1, 1979, and November 1 of each
subsequent year, the director shall certify to the county
auditor of each county the percentages of actual value at
which residential property, agricultural property, commercial
property, industrial property, property valued by the
department of revenue pursuant to chapter 434 , property valued
by the department pursuant to chapter 438, and property valued
by the department of revenue pursuant to chapters 428 , 433 ,
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and 437 , and 438 in each assessing jurisdiction in the county
shall be assessed for taxation, including for assessment years
beginning on or after January 1, 2022, the percentages used to
apply the assessment limitations under subsection 5 , paragraphs
“b” and “c” . The county auditor shall proceed to determine the
assessed values of agricultural property, residential property,
commercial property, industrial property, property valued by
the department of revenue pursuant to chapter 434 , property
valued by the department pursuant to chapter 438, and property
valued by the department of revenue pursuant to chapters 428 ,
433 , and 437 , and 438 by applying such percentages to the
current actual value of such property, as reported to the
county auditor by the assessor, and the assessed values so
determined shall be the taxable values of such properties upon
which the levy shall be made.
10. The percentages of actual value computed by the
department of revenue for agricultural property, residential
property, commercial property, industrial property, property
valued by the department of revenue pursuant to chapter 434 ,
property valued by the department pursuant to chapter 438,
and property valued by the department of revenue pursuant to
chapters 428 , 433 , and 437 , and 438 , including for assessment
years beginning on or after January 1, 2022, the percentages
used to apply the assessment limitations under subsection 5 ,
paragraphs “b” and “c” , and used to determine assessed values of
those classes of property do not constitute a rule as defined
in section 17A.2, subsection 11 .
Sec. 111. EFFECTIVE DATE. This division of this Act takes
effect July 1, 2024.
DIVISION VIII
NATURAL RESOURCES AND OUTDOOR RECREATION TRUST FUND
Sec. 112. Section 461.32, subsection 2, paragraph a, Code
2023, is amended to read as follows:
a. The establishment, restoration, or enhancement , and
management of state parks, state preserves, state forests,
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wildlife areas, wildlife habitats, native prairies, and
wetlands.
Sec. 113. Section 461.32, subsection 2, Code 2023, is
amended by adding the following new paragraphs:
NEW PARAGRAPH . g. The construction, maintenance, or
expansion of roads on state-owned land under the jurisdiction
of the department of natural resources.
NEW PARAGRAPH . h. Salaries and employee benefits paid to
support conservation officer, park ranger, or park manager
positions within the department of natural resources.
Sec. 114. Section 461.33, subsection 2, paragraph a, Code
2023, is amended to read as follows:
a. (1) Soil conservation and watershed protection,
including by supporting the division of soil conservation
and water quality within the department of agriculture and
land stewardship and soil and water conservation district
commissioners. The department may provide for the installation
establishment of conservation practices , management practices
to control soil erosion on row cropped land, and watershed
protection improvements as provided in chapters 161A , 161C ,
461A , and 466 .
(2) Each fiscal year, at least ten percent of the moneys
allocated to the account shall be used to support the planting
and maintenance of cover crops as provided in section 161A.73.
Sec. 115. EFFECTIVE DATE. This division of this Act takes
effect January 1, 2025.
DIVISION IX
CHARITABLE CONSERVATION CONTRIBUTION TAX CREDIT
Sec. 116. Section 2.48, subsection 3, paragraph e,
subparagraph (6), Code 2023, is amended by striking the
subparagraph.
Sec. 117. Section 422.11W, Code 2023, is amended by adding
the following new subsection:
NEW SUBSECTION . 5. Commencing with tax years beginning
on or after January 1, 2025, a charitable conservation
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contribution tax credit shall not be claimed against taxes as
provided in this section, except for tax credits claimed for
qualified real property interests conveyed prior to January 1,
2025.
Sec. 118. Section 422.33, subsection 25, Code 2023, is
amended by striking the subsection and inserting in lieu
thereof the following:
25. The taxes imposed under this subchapter shall be reduced
by a charitable conservation contribution tax credit as allowed
under section 422.11W for each tax year the taxpayer has
credit, in excess of tax liability, for qualified real property
interests conveyed prior to January 1, 2025.
Sec. 119. PRESERVATION OF EXISTING RIGHTS. This division
of this Act is not intended to and shall not limit, modify, or
otherwise adversely affect any amount of tax credit issued,
awarded, or allowed prior to January 1, 2025, nor shall it
limit, modify, or otherwise adversely affect a taxpayer’s right
to claim or redeem a tax credit issued, awarded, or allowed
prior to January 1, 2025, including but not limited to any tax
credit carryforward amount.
Sec. 120. EFFECTIVE DATE. This division of this Act takes
effect January 1, 2025.
Sec. 121. APPLICABILITY. This division of this Act applies
to tax years beginning on or after January 1, 2025.
DIVISION X
PROPERTY TAX BENEFITS AND INCENTIVES
Sec. 122. NEW SECTION . 404.3C Assessment agreements ——
commercial property.
1. For revitalization areas established under this chapter
on or after the effective date of this division of this Act
and for first-year exemption applications for property located
in a revitalization area in existence on the effective date
of this division of this Act filed on or after the effective
date of this division of this Act, commercial property shall
not receive a tax exemption under this chapter unless the city
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or county, as applicable, and the owner of the qualified real
estate enter into a written assessment agreement specifying a
minimum actual value until a specified termination date for the
duration of the exemption period.
2. a. The assessment agreement shall be presented to the
appropriate assessor. The assessor shall review the plans and
specifications for the improvements to be made to the property
and if the minimum actual value contained in the assessment
agreement appears to be reasonable, the assessor shall execute
the following certification upon the agreement:
The undersigned assessor, being legally responsible for the
assessment of the above described property upon completion of
the improvements to be made on it, certifies that the actual
value assigned to that land and improvements upon completion
shall not be less than $.........
b. The assessment agreement with the certification of
the assessor and a copy of this subsection shall be filed in
the office of the county recorder of the county where the
property is located. Upon completion of the improvements,
the assessor shall value the property as required by law,
except that the actual value shall not be less than the minimum
actual value contained in the assessment agreement. This
subsection does not prohibit the assessor from assigning a
higher actual value to the property or prohibit the owner
from seeking administrative or legal remedies to reduce the
actual value assigned except that the actual value shall not
be reduced below the minimum actual value contained in the
assessment agreement. An assessor, county auditor, board of
review, director of revenue, or court of this state shall not
reduce or order the reduction of the actual value below the
minimum actual value in the agreement during the term of the
agreement regardless of the actual value which may result from
the incomplete construction of improvements, destruction or
diminution by any cause, insured or uninsured, except in the
case of acquisition or reacquisition of the property by a
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public entity. Recording of an assessment agreement complying
with this subsection constitutes notice of the assessment
agreement to a subsequent purchaser or encumbrancer of the land
or any part of it, whether voluntary or involuntary, and is
binding upon a subsequent purchaser or encumbrancer.
Sec. 123. NEW SECTION . 404.3D Exemptions for residential
property.
For revitalization areas established under this chapter on
or after the effective date of this division of this Act and
for first-year exemption applications for property located in a
revitalization area in existence on the effective date of this
division of this Act filed on or after the effective date of
this division of this Act, an exemption otherwise authorized
under this chapter shall not be authorized for or approved by a
city or county, as applicable, for property that is residential
property.
Sec. 124. EFFECTIVE DATE. This division of this Act takes
effect July 1, 2024.
DIVISION XI
TAX INCREMENT FINANCING
Sec. 125. Section 403.19, subsection 2, paragraph a, Code
2023, is amended to read as follows:
a. That portion of the taxes each year in excess of such
amount shall be allocated to and when collected be paid into
a special fund of the municipality to pay the principal of
and interest on loans, moneys advanced to, or indebtedness,
whether funded, refunded, assumed, or otherwise, including
bonds issued under the authority of section 403.9, subsection
1 , incurred by the municipality to finance or refinance, in
whole or in part, an urban renewal project within the area,
and to provide assistance for low and moderate income family
housing as provided in section 403.22 . However, except
as provided in paragraph “b” , taxes for the regular and
voter-approved physical plant and equipment levy of a school
district imposed pursuant to section 298.2 and taxes for the
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instructional support program of a school district imposed
pursuant to section 257.19 , taxes for the payment of bonds
and interest of each taxing district, and taxes imposed under
section 346.27, subsection 22 , related to joint county-city
buildings shall be collected against all taxable property
within the taxing district without limitation by the provisions
of this subsection . Additionally, for property taxes due and
payable in fiscal years beginning on or after July 1, 2025,
if the portion of the urban renewal area that is subject to a
division of revenue under this section contains wind energy
conversion property that is subject to special valuation under
section 427B.26, foundation property taxes of a school district
imposed under section 257.3 shall be collected against all
taxable property within that portion of the urban renewal area
without limitation by the provisions of this subsection and
when collected be paid into the fund of the school district
into which all other property taxes are paid.
DIVISION XII
TRANSIT FUNDING
Sec. 126. Section 364.2, subsection 4, paragraph f,
subparagraph (1), subparagraph division (b), Code 2023, is
amended to read as follows:
(b) For franchise fees assessed and collected during fiscal
years beginning on or after July 1, 2013 2024 , but before
July 1, 2030, by a city that is the subject of a judgment,
court-approved settlement, or court-approved compromise
providing for payment of restitution, a refund, or a return
described in section 384.3A, subsection 3 , paragraph “j” with
a population exceeding two hundred thousand , the rate of the
franchise fee shall not exceed seven and one-half percent
of gross revenues generated from sales of the franchisee in
the city, and franchise fee amounts assessed and collected
during such fiscal years in excess of five percent of gross
revenues generated from sales shall be used solely for the
purpose specified in section 384.3A, subsection 3 , paragraph
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“j” . A city may assess and collect a franchise fee in excess
of five percent of gross revenues generated from the sales
of the franchisee pursuant to this subparagraph division (b)
for a period not to exceed seven consecutive fiscal years
once the franchise fee is first imposed at a rate in excess
of five percent. An ordinance increasing the franchise fee
rate to greater than five percent pursuant to this subparagraph
division (b) shall not become effective unless approved at
an election. After passage of the ordinance, the council
shall submit the proposal at a special election held on a date
specified in section 39.2, subsection 4 , paragraph “b” . If a
majority of those voting on the proposal approves the proposal,
the city may proceed as proposed. The complete text of the
ordinance shall be included on the ballot and the full text
of the ordinance posted for the voters pursuant to section
52.25 . All absentee voters shall receive the full text of the
ordinance along with the absentee ballot. This subparagraph
division (b) is repealed July 1, 2030.
Sec. 127. Section 384.3A, subsection 3, paragraph j, Code
2023, is amended to read as follows:
j. For franchise fees assessed and collected by a city in
excess of five percent of gross revenues generated from sales
of the franchisee within the city pursuant to section 364.2,
subsection 4 , paragraph “f” , subparagraph (1), subparagraph
division (b), during fiscal years beginning on or after July 1,
2013 2024 , but before July 1, 2030, the adjustment, renewal,
or extension of any part or all of the legal indebtedness of
a city, whether evidenced by bonds, warrants, court-approved
settlements, court-approved compromises, or judgments, or the
funding or refunding of the same, if such legal indebtedness
relates to restitution, a refund, or a return ordered by a
court of competent jurisdiction for franchise fees assessed
and collected by the city before June 20, 2013 solely for the
reduction of property tax levies that support the operation and
maintenance of a municipal transit system or a regional transit
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district . This paragraph “j” is repealed July 1, 2030.
Sec. 128. EFFECTIVE DATE. This division of this Act takes
effect July 1, 2024.
EXPLANATION
The inclusion of this explanation does not constitute agreement with
the explanation’s substance by the members of the general assembly.
This bill relates to state and local revenue and finances.
DIVISION I —— SALES AND USE TAX RATES AND DISTRIBUTION. An
amendment to the Iowa Constitution was ratified on November 2,
2010, which created a natural resources and outdoor recreation
trust fund (fund) and dedicated a portion of state revenues to
the fund for the purposes of protecting and enhancing water
quality and natural areas in the state including parks, trails,
and fish and wildlife habitat, and conserving agricultural
soils in the state (Article VII, section 10). The fund is
codified in Code section 461.31. Pursuant to the amendment,
the amount credited to the fund will be equal to the amount
generated by an increase in the state sales tax rate occurring
after the effective date of the constitutional amendment, but
shall not exceed the amount that a state sales tax rate of
0.375 percent would generate. The state sales tax rate has not
been increased since the effective date of the constitutional
amendment, so no amounts have been credited to the fund. The
bill increases the sales tax rate and the use tax rate from 6
percent to 7 percent beginning January 1, 2025. In lieu of the
local option and sales services tax revenue repealed in another
division of the bill, the bill transfers a specified amount of
the state sales and use tax revenues collected to the local
sales and use tax fund established under Code chapter 423B,
for allocation and expenditure in a manner similar to that
which was provided for local sales and services tax revenues.
However, as provided in another division of the bill, amounts
resulting from the increase in the use tax for the period
beginning January 1, 2025, through December 31, 2043, are
deposited in the local use tax supplement fund to be used
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for purposes of that fund. The amount of sales tax revenues
transferred to the local sales and use tax fund under Code
chapter 423B for the period beginning January 1, 2025, through
December 31, 2027, is an amount equating to a tax of 1.4
percent. The amount transferred is then reduced each year by
an amount equating to a 0.05 percent tax until January 1, 2030.
The amount of sales tax revenues transferred to the local sales
and use tax fund under Code chapter 423B beginning January 1,
2030, is an amount equating to a tax of 1.25 percent. The bill,
as the result of Article VII, section 10, of the Constitution
of the State of Iowa, also amends the transfer of sales tax
revenues to the secure an advanced vision for education fund in
Code section 423.2A(2).
DIVISION II —— WATER SERVICE TAX. The bill changes the water
service tax on the furnishing of water to consumers so that the
rate is equal to the rate of the sales tax that is being imposed
under Code chapter 423.
Currently, one-half of the moneys collected from the water
service tax are deposited into the general fund of the state
and one-half of the moneys are deposited into the water quality
financial assistance fund created in Code section 16.134A.
The bill strikes the provision requiring one-half of the
water service tax moneys be deposited into the water quality
financial assistance fund and requires all moneys generated
from the water service tax be deposited into the general fund
of the state.
The bill also strikes the future repeal of the water service
excise tax.
The division takes effect January 1, 2025.
DIVISION III —— LOCAL OPTION TAXES. Code chapter 423B
authorizes, following approval at election, the imposition of
a local option sales and services tax at a rate not to exceed
one percent to be administered similarly to the state sales
and services tax and authorizes the imposition of a local
vehicle tax. The bill strikes the authorization for the local
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vehicle tax and also strikes the authorization to impose the
local option sales and services tax under Code chapter 423B,
but instead authorizes cities and counties to expend specified
state sales and use tax revenues that are deposited in the
local sales and use tax fund following the increase of the
state sales and use taxes rates in previous sections of the
bill.
Under the bill, sales and services tax revenue credited to
and deposited in each county’s account within the local sales
and use tax fund must be expended by each recipient county
and city as required by the jurisdiction’s revenue purpose
statement, including a revenue purpose statement approved at
election prior to January 1, 2025, and in effect on or set to
take effect on or after January 1, 2025, for the use of local
option sales and use tax revenue previously collected under
Code chapter 423B, or be used to reduce specified property tax
levies.
The bill also modifies the requirements and permissible uses
of funds received under Code chapter 423B. The bill specifies
that for a county with a population of 400,000 or more, a
revenue purpose statement governing the use of revenues for the
unincorporated area of the county approved on or after January
1, 2025, shall require the use of 75 percent of such moneys
for property tax relief. Additionally, the bill provides that
property tax relief includes payments under a Code chapter
28E agreement for purposes of a regional transit district if
such payments are used to reduce the regional transit district
levy. For a city located in whole or in part in a county with
a population of 400,000 or more, the use of revenues received
under Code chapter 423B for such regional transit district
purposes shall not exceed 10 percent of the amount received
and for a county with a population of 400,000 or more, for the
unincorporated area, shall not exceed 25 percent.
The board of supervisors of each county and the city
council of each city may adopt by resolution a revenue purpose
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statement for the expenditure of funds received under Code
chapter 423B.
The revenues transferred to the local sales and use tax fund
continue to be allocated to the specific county account for
the county in which the tax was collected. Additionally, all
cities and counties are eligible to receive the allocation of
revenues, not just those that had previously approved the local
option tax.
As provided in another division of the bill, specified
amounts of use tax revenue is transferred to the local use
tax supplement fund, as created in the bill. Moneys in the
local use tax supplement fund are annually appropriated to the
department of revenue to be used for supplement payments to
cities and counties. For each year during the period beginning
January 1, 2025, through December 31, 2043, each city or county
for the unincorporated portion of the county shall receive a
local use tax supplement payment equal to the difference, but
not less than zero, between the amount of revenue received
by the city or county under Code section 423B.7, Code 2023,
for the period beginning January 1, 2024, and ending December
31, 2024, minus the amount that would have been received by
that city or county for that period if all cities and the
county were eligible for distributions of such revenues under
Code section 423B.7, Code 2023. If moneys in the fund are
insufficient to pay all supplement amounts for the year, the
director of revenue shall prorate the payment of the supplement
payments. The supplement payment is required to be combined
with and be used in the same manner and be subject to the same
requirements as moneys received by the city or county under
Code section 423B.7 for that year. The bill establishes a
future repeal of the Code section establishing the supplement
payments on January 1, 2044. Moneys in the fund upon the
repeal shall be transferred to the appropriate county accounts
for the counties from which the tax was paid.
Code section 423B.10 allows a city in which a local sales
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and services tax is imposed to, by ordinance and following
approval of the board of supervisors, to provide for the use
of a designated amount of increased local option sales and
services tax revenue for urban renewal purposes. The bill
modifies provisions governing this authorization to provide for
the use of a specified amount of the applicable increased state
sales tax revenues deposited in the local sales and use tax
fund in lieu of the increased local option sales and services
tax revenue. The bill allows city ordinances providing for the
use of certain local option sales and services tax revenues for
urban renewal purposes in effect on January 1, 2025, to remain
in effect until expiration, amendment, or repeal.
The bill also eliminates the authority to impose a local
sales and services tax under the quad cities interstate
metropolitan authority compact under Code chapter 28A beginning
on January 1, 2025.
The division takes effect January 1, 2025.
DIVISION IV —— HOMESTEAD PROPERTY TAX CREDIT. Code chapter
425 establishes a homestead property tax credit in an amount
equal to the property tax levy on the first $4,850 of actual
value. The homestead credit is paid for from the homestead
credit fund under Code section 425.1 for which there is an
annual appropriation for an amount sufficient to implement the
credit.
The bill reduces the amount of the homestead credit over a
period beginning with the fiscal year beginning July 1, 2025,
until the credit is ended in the fiscal year beginning July
1, 2028, at which time the remaining moneys in the homestead
credit fund are transferred for deposit in the general fund
of the state. During the same period, the bill establishes
a homestead property tax exemption. For the assessment year
beginning January 1, 2024, the exemption amount is $2,500. For
the assessment year beginning January 1, 2025, the exemption
amount is $5,000. For the assessment year beginning January 1,
2026, the exemption amount is $7,500. For the assessment year
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beginning January 1, 2027, and each succeeding assessment year,
the exemption amount is $10,000.
Code section 25B.7 provides that if a state appropriation
made to fund a credit or exemption is not sufficient to fully
fund the credit or exemption, the political subdivision shall
be required to extend to the taxpayer only that portion of the
credit or exemption estimated by the department of revenue to
be funded by the state appropriation. The requirement for
fully funding and the consequences of not fully funding under
Code section 25B.7 applies to the homestead credit under Code
chapter 425. The bill strikes the portion of Code section
25B.7 that makes the requirement for fully funding and the
consequences of not fully funding applicable to the homestead
property tax credit and provides that the general requirement
of Code section 25B.7 for property tax credits and exemptions
on or after January 1, 1997, does not apply to the homestead
property tax exemption established in the bill.
The bill makes corresponding changes to various other
provisions of the Code relating to and referencing the
homestead property tax credit.
The bill provides that homestead credit claims approved
prior to and valid on the effective date of the division shall
result in a homestead tax exemption under Code chapter 425,
subchapter I, as enacted in the division, without further
filing by the claimant.
Division IV applies to assessment years beginning on or
after January 1, 2024.
DIVISION V —— ELDERLY PROPERTY TAX CREDIT. Code section
425.17, in part, establishes eligibility criteria for the
elderly property tax credit. One such category of eligibility
is a person who has attained the age of 70 years on or before
December 31 of the base year, who has a household income of
less than 250 percent of the federal poverty level. The bill
changes that income threshold to 300 percent of the federal
poverty level for credit claims filed on or after January 1,
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2024.
The bill also amends Code section 423.23 to modify part of
the calculation for the elderly property tax credit to account
for the homestead credit for the property under Code section
425.1. The portions of the division amending Code section
423.23 take effect upon enactment and apply retroactively to
claims for the credit filed on or after January 1, 2022.
DIVISION VI —— MILITARY SERVICE PROPERTY TAX EXEMPTION AND
CREDIT. Division VII relates to the military service property
tax exemption and credit. Under current law, veterans of World
War I are entitled to a property tax exemption of $2,778 in
taxable value and honorably discharged veterans who served
during other specific time periods are entitled to a property
tax exemption of $1,852 in taxable value. The bill increases
the exemption amount for all eligible veterans to $2,055 for
the assessment year beginning January 1, 2024, and to $4,000
for assessment years beginning on or after January 1, 2025.
Under current law, the state provides funding to local
governments for the military service property tax exemption
and credit up to $6.92 per $1,000 of assessed value of the
exempt property. The bill reduces the amount of the credit for
the fiscal year beginning July 1, 2025, to $6.92 per $1,000
of assessed value of the exempt property, but not to exceed
$945 of assessed value and eliminates funding for the credit
starting with the fiscal year beginning July 1, 2026.
Code section 25B.7 provides that if a state appropriation
made to fund a credit or exemption is not sufficient to fully
fund the credit or exemption, the political subdivision shall
be required to extend to the taxpayer only that portion of the
credit or exemption estimated by the department of revenue to
be funded by the state appropriation. The requirement for
fully funding and the consequences of not fully funding under
Code section 25B.7 applies to the military service property
tax credit and exemption to the extent of $6.92 per $1,000
of assessed value of the exempt property. The bill strikes
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the portion of Code section 25B.7 that makes the requirement
for fully funding and the consequences of not fully funding
applicable to the military service property tax credit and
exemption and provides that the general requirement of Code
section 25B.7 for property tax credits and exemptions on or
after January 1, 1997, does not apply to the military property
tax exemption established in the bill.
The division applies to assessment years beginning on or
after January 1, 2024.
DIVISION VII —— PROPERTY TAX ASSESSMENT LIMITATIONS. Code
section 441.21 establishes assessment limitations for various
classifications of property. The bill reduces the percentage
of actual value at which property valued by the department
of revenue pursuant to Code chapter 438 (pipelines) shall
be assessed by 5 percent each year from 100 percent for the
assessment year beginning January 1, 2024, to 90 percent for
assessment years beginning on or after January 1, 2025.
The bill also reduces the percentage of actual value at
which the portion of commercial, industrial, and railway
properties that exceeds $150,000 is assessed by 5 percent each
year from 90 percent for the assessment year beginning January
1, 2024, to 80 percent for assessment years beginning on or
after January 1, 2026. Accordingly, the bill makes a change
to the payments made to local governments under Code section
441.21(5)(e) that are in part calculated using the assessment
limitation applied to commercial and industrial property.
2018 Iowa Acts, chapter 1158, changed the assessment of
telephone and telegraph company property under Code chapter
433. Code chapter 433 applies to the assessment and taxation
of telephone and telegraph company property for assessment
years beginning before January 1, 2022. Starting with the
assessment year beginning January 1, 2022, such property is
assessed locally in the same manner as commercial property.
References to Code chapter 433 are not included in the
applicable Code section as amended in the bill for assessment
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years beginning on or after January 1, 2025.
This division of the bill takes effect July 1, 2024.
DIVISION VIII —— NATURAL RESOURCES AND OUTDOOR RECREATION
TRUST FUND. The bill amends provisions in Code chapter 461
which would implement an amendment to the Constitution of the
State of Iowa as ratified on November 2, 2010, as directed in
the Iowa Constitution (see Code section 461.3; and Article VII,
section 10 of the codified Iowa Constitution).
CONSTITUTIONAL AMENDMENT. The amendment dedicates a
portion of state revenue annually generated from the state’s
sales tax to protect and enhance water quality and natural
areas in this state, including parks, trails, and fish and
wildlife habitats, and conserve agricultural soils in this
state. The amendment creates a natural resources and outdoor
recreation trust fund (fund) within the state treasury. The
fund is credited with an amount equal to the amount annually
generated by a sales tax rate of three-eighths of 1 percent.
However, no revenue is credited to the fund until the tax rate
existing on the effective date of the amendment is increased.
After the effective date of any such increase, which another
division of the bill provides, the fund will be credited with
an amount equal to the amount generated by the increase up to
the three-eighths of 1 percent limit.
BILL’S PROVISIONS. Code chapter 461 creates the statutory
version of the fund and provides for the distributions of
revenue from the fund to various accounts used to support
various initiatives to be carried out by state agencies
including the department of natural resources (DNR) and
department of agriculture and land stewardship (DALS).
Twenty-three percent of moneys credited to the fund are
allocated to a natural resources account administered by DNR
to support initiatives related to state lands, wildlife,
recreation, natural habitat, rivers and streams, and education.
The bill provides that moneys in the account are to be used
(1) for the construction, maintenance, or expansion of roads
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on state-owned land under DNR’s jurisdiction, and (2) to
support salaries and benefits paid to conservation officers,
park rangers, or park managers (amended Code section 461.32).
Twenty percent of moneys credited to the fund are allocated
to the soil conservation and water protection account to
support soil conservation practices, the conservation of
highly erodible land, and soil conservation or crop management
practices used in biomass production. The bill expressly
provides that for each fiscal year, at least 10 percent of
moneys in the account must be used to support the planting and
maintenance of cover crops by landowners (amended Code section
461.33; referring to voluntary cost-share projects administered
under Code section 161A.73).
EFFECTIVE DATE. The division of the bill takes effect
January 1, 2025.
DIVISION IX —— CHARITABLE CONSERVATION CONTRIBUTION
TAX CREDIT. The bill prohibits a charitable conservation
contribution tax credit from being claimed against the
individual or corporate income tax, except for qualified real
property interests conveyed prior to January 1, 2025. The bill
allows the credit in excess of tax liability to carry forward
for qualified real property interests conveyed prior to January
1, 2025. The bill preserves existing rights and is intended to
not limit, modify, or otherwise adversely affect any amount of
the tax credit issued, awarded, or allowed prior to the repeal
date of any tax credit. The division takes effect January 1,
2025, and applies to tax years beginning on or after that date.
DIVISION X —— PROPERTY TAX BENEFITS AND INCENTIVES. The bill
amends Code chapter 404 (urban revitalization areas) to provide
that for revitalization areas established on or after the
effective date of the division and for first-year property tax
exemption applications for property located in a revitalization
area in existence on the effective date of the division filed
on or after the effective date of the division, commercial
property shall not receive a tax exemption under Code chapter
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404 unless the city or county, as applicable, and the owner
of the qualified real estate enter into a written assessment
agreement specifying a minimum actual value until a specified
termination date for the duration of the exemption period.
The bill also establishes limitations on exemptions for
residential property within revitalization areas. For
revitalization areas established on or after the effective date
of the division and for first-year exemption applications for
property located in a revitalization area in existence on the
effective date of the division filed on or after the effective
date of the division, an exemption otherwise authorized under
Code chapter 404 shall not be authorized for or approved by a
city or county, as applicable, for property that is residential
property.
Division X of the bill takes effect July 1, 2024.
DIVISION XI —— TAX INCREMENT FINANCING. Code section 403.19
authorizes municipalities to provide by ordinance for the
division of property tax revenue (tax increment financing)
collected against property located within an urban renewal
area. The bill provides that for property taxes due and
payable in fiscal years beginning on or after July 1, 2025,
if the portion of the urban renewal area that is subject
to a division of property tax revenue contains wind energy
conversion property that is subject to special valuation under
Code section 427B.26, foundation property taxes of a school
district imposed under Code section 257.3 in that portion of
the urban renewal area shall not be subject to the division of
property tax revenue and shall instead be paid to the school
district.
DIVISION XII —— TRANSIT FUNDING. Cities may grant various
types of franchises for specified services under Code section
362.4 and may generally impose a franchise fee based upon
a percentage of gross revenues generated from sales of the
franchisee within the city not to exceed 5 percent. An
exception allowing for a franchise fee up to 7.5 percent exists
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in specified circumstances for a period of fiscal years ending
July 1, 2030, if approved at election. The bill strikes
the provisions providing for that exception and establishes
conditions under which a city with a population that exceeds
200,000 may impose a franchise fee of up to 7.5 percent for
fiscal years beginning on or after July 1, 2024. The bill
requires that franchise fee amounts collected during such
fiscal years in excess of 5 percent of gross revenues generated
from sales shall be used solely for the reduction of property
tax levies used to support the operation and maintenance of a
municipal transit system or a regional transit district.
The division of the bill takes effect July 1, 2024.
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