Throughout this year’s overhaul of Iowa’s property tax system, Senate Democrats were committed to ensuring our small businesses got a boost. That’s why the reforms we approved include a Main Street business property tax credit that reduces commercial property taxes for all Iowa businesses and helps small businesses the most.
Over the years, Iowa’s property tax system has become a barrier to new job creation and business expansion. Commercial property owners pay taxes on 100 percent of the assessed value of their property—about twice what residential property owners pay.
With Senate File 295, we made Iowa’s property tax system more equitable for small companies with a $125 million commercial property tax cut that starts from the bottom up. Most of the benefit goes to local small business owners, the biggest job creators in our communities.
When fully phased in after three years, almost two-thirds of Iowa commercial properties—those valued at $145,000 or less—will be taxed at the same rate as residential properties. Bigger businesses will also get the same break on the first $145,000 of their property.
One of the best things about this plan is that it protects Iowans from a “tax shift” that could increase their residential property taxes. The state will reimburse local governments for the money they are no longer collecting in local commercial property taxes.