Divisions 5 and 6 of House File 718, passed in the 2023 legislative session and signed by the Governor on May 4, 2023, establish a homestead tax exemption for claimants 65 years of age or older and increase the military service tax exemption. Both changes are retroactive and will apply to the assessment year starting January 1, 2023.
Homestead Tax Exemption for Claimants 65 Years of Age or Older
In addition to the homestead tax credit, eligible claimants who are 65 years of age or older on or before January 1 of the assessment year are now eligible for a homestead tax exemption. For the assessment year beginning on January 1, 2023, the exemption is for $3,250 of taxable value. For assessment years beginning on or after January 1, 2024, the exemption is for $6,500 of taxable value. Claimants are able to file a claim for this exemption on the same form as the claim for credit. When a homestead credit claim is approved, the exemption will also be granted if the claimant meets the age criteria for that assessment year. If the claim for the exemption is successful, the exemption will be applied in successive years without needing to file again. Unlike the homestead tax credit, the state will not be reimbursing the exemption.
Claimants who have previously been approved and continue to qualify for the homestead credit before May 4, 2023 should be automatically awarded the exemption if they meet the eligibility criteria. Under HF 718, the exemption can only be automatically granted if the assessor has enough information to verify eligibility. The Iowa Department of Revenue (IDR) has amended the Homestead Tax Credit and Exemption (54-028) to allow claimants to apply for the exemption. If claimants want to provide birthdates of all owners on a homestead for their own convenience, they are welcome to do so. Each owner can file their own form and attest to their own age and eligibility (though they are certainly not required to do so).
Additionally, the Department has been asked about requiring additional documentation to verify age eligibility (such as a driver’s license). 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.
Increase in Military Exemption
The military service tax exemption is being increased to $4,000 in taxable value for assessment years on or after January 1, 2023, for an honorably separated, retired, furloughed to a reserve, placed on inactive status, or discharged veteran as defined in Iowa Code section 35.1(2)(a) or (b). For each fiscal year beginning on or after July 1, 2024, funding for the military service tax exemption will be removed from the general fund of the state.
Please reach out to the Department at propertytax@iowa.gov as additional questions come up.