As the end of the 2025 legislative session begins its slow march to adjournment, Grow Cedar Valley continues to follow two issues that we have concentrated on this year: property tax reform and the Iowa Economic Development Authority’s overhaul of its system of tax credits and incentives related to development.

Property Taxes

Property taxes are the single biggest issue legislators have been hearing about from constituents.  Here are some numbers from the Common Sense Institute, an Iowa think tank: Iowa ranks 11th highest nationally for local property tax burden and 19th for total local tax burden. Property taxes alone consume 3.25% of Iowans’ personal income, 25% more than the national average.  From 2000 to 2024, Iowa’s property tax revenue grew by 170%, more than double the rate of inflation over the same period. 85% of Iowa’s local tax revenue comes from property taxes, compared to 74% nationally.

Over the first 7-8 weeks of the session, bills were drafted and circulated widely by both chambers looking for feedback on reform ideas.  Now two updated bills, HSB 328 and SSB 1227, have emerged.  The major updates in these new versions include:

• Increases the homestead exemption benefit from $25,000 to $50,000 to help bring relief to residential property taxpayers.
• Removes the rollback for all classifications except agriculture immediately, as opposed to the original 5-year phaseout.
• Implements a 2% revenue restriction along with a CPI adjustment to help local entities manage times of high inflation. The 2% would not apply to new growth.
• Provides a minimum budget guarantee to provide small communities with certainty in their budgeting process.
• Provides a new classification for multi-residential property, meaning it would no longer be assessed at a lower residential rate.

At the start of the session, it appeared this would be a two-year effort to secure approval. While significant progress has been made, several factors still make passage this year uncertain. Although the proposed bills offer limited immediate relief, they represent important reform efforts that improve transparency and predictability for residential, commercial, and industrial property taxpayers.

IEDA Tax Credits and Incentives

The tax credit and incentives overhaul bill faces a more complex path to enactment. Developed by the Governor and advanced through IEDA, the bill impacts a wide range of business and community development tax credit programs. It introduces a new Iowa film production incentive and eliminates the Endow Iowa tax credit.

The High-Quality Jobs tax credit has been restructured into the Business Incentives for Growth (BIG) program, aiming to better align with industry needs. The bill also establishes the Seed Investor program, replacing the current Angel Investor program. The Research Activities tax credit would be narrowed to key industries and capped at $40 million annually. Meanwhile, the MEGA program, along with the Workforce Housing, Brownfield/Grayfield, and Historic Preservation tax credits, would remain unchanged, retaining their existing caps.

That said, the bill contains provisions that are likely to draw criticism from all sides, making its passage a significant challenge without substantial amendments.

Finally, one of the biggest developments recently is Governor Reynolds announcing she will not seek re-election in 2026. A number of prominent Republicans are already being floated as potential candidates, including former Rep. Brad Sherman—who previously indicated plans to challenge Reynolds—as well as Attorney General Brenna Bird; Congressional Representatives Ashley Hinson, Zach Nunn, and Randy Feenstra; Speaker Pat Grassley; Secretary of Agriculture Mike Naig; U.S. Ambassador to NATO Matt Whitaker; Senator Michael Bousselot; Representative Bobby Kaufmann; and former Senator Brad Zaun. Of course, more names are likely to surface. This will be Iowa’s first open gubernatorial race in two decades, and it’s shaping up to be an exciting primary season for both parties.

At Grow Cedar Valley, we are proud to serve as the voice for business and community across the Cedar Valley—amplifying local priorities, advocating for policies that support growth and opportunity, and working to ensure our region remains competitive and connected. We welcome your questions, feedback, and perspectives at any time. Your input helps shape our efforts and strengthens our collective impact. Please don’t hesitate to reach out to our team to share your thoughts or to learn more about how policy developments may affect your business or organization.

For more information on Grow Cedar Valley’s 2025 Legislative Priorities, click here.

Or contact:

Steve Firman

Director of Government Affairs

steve@growcedarvalley.com

or

Adrienne Miller

Director of Business Services & Advocacy

adrienne@growcedarvalley.com