Division 20 of 2026 Iowa Acts, SF2472, signed by the Governor on May 18, 2026, replaces the homestead tax credit with a homestead tax exemption in the amount of 10% of the taxable value of the homestead. An exemption is a reduction in the value of the property that a taxpayer pays taxes on. A credit is a direct reduction of the tax amount.
This change is retroactive to assessment year 2026, which will apply to property taxes paid in September of 2027 and March of 2028. The minimum amount of the exemption is $5,500 in taxable value. The maximum amount of the exemption is $20,000 in taxable value. For each assessment year beginning on or after January 1, 2027, the maximum assessment amount will be amended by the Department to account for inflation. The credit was equal to the property taxes paid on $4,850 of a homestead’s value. Therefore, the tax benefit to a homeowner is greater under the new bill.
This change does not eliminate the disabled veteran homestead tax credit for eligible veterans.
Eligible claimants who are 65 years of age or older on or before January 1 of the assessment year are eligible for an additional homestead tax exemption for $6,500 of taxable value. If the claim for the exemption is successful, the exemption will be applied in successive years without needing to file again.
Assessors may not require any additional documentation that is not requested on the form. The Homestead form does not require any additional documentation, nor does chapter 425, subchapter I as amended by HF 718 require additional documentation. Assessors may ask for verification of age but cannot deny the application based on the applicant’s refusal to provide documentation that is not required by law. The form requires the applicant to attest that the information they have provided is true. Assessors can use information other than what the claimant provides to verify the age of the claimant. If assessors have reliable information that shows the attestation is false, they can recommend disallowance. In the event of fraud on an allowed claim, Iowa Code section 425.7 provides a process for remedy by the Department including penalty and interest.
Claimants who received the homestead credit or exemption before July 1, 2026 will be automatically awarded the 10% exemption without further filing if they continue to meet the eligibility criteria.
The homestead tax credit was applied on the total amount of the property taxes due on the homestead to reduce the amount of tax the homeowner is required to pay. The exemption reduces the taxable value of the property, decreasing the total amount due on the homestead.
The following example shows how taxes are calculated on a residential home with an assessed value of $300,000 before and after the elimination of the credit. Both examples assume that the taxpayer is eligible for the 65+ exemption and use the assessment limitations percentage from assessment year 2025.
Before SF 2472
$300,000 value times assessment limitation of 44.5345% = $133,603
Minus 65+ homestead exemption: = $127,103 (taxable value)
Assumed consolidated levy rate: $32/1,000
Divide taxable value by 1,000 = 127.103
Multiply levy rate = $4,067.30
Subtract homestead credit (levy on first $4,850 of value): $155.20
Net property taxes = $3,912.10
After SF 2472
$300,000 value times assessment limitation of 44.5345% = $133,603
Minus 10% homestead exemption = 120,242
Minus 65 + homestead exemption: = $113,742 (taxable value)
