Business property owners in Iowa received $127.3 million in tax relief this month, thanks to landmark legislation enacted by the split-control Legislature in 2013, marking the first reduction in business property taxes in more than three decades. The relief was delivered via a five percent rollback on commercial and industrial property tax rates normally taxed at 100 percent of assessed value, and a new tax credit sought by applicants for 70,444 business property units for taxes on the 2013 property assessment that are due and payable this month and next March, according to the state Department of Revenue.
The Iowa Department of Revenue has implemented the first phase of Gov. Terry Branstad's 2013 tax reform package. The law removed the assessment limitation for commercial and industrial properties. Instead, according to the Globe Gazette, the aforementioned classified property owners will receive a 5 percent decrease on taxable value (from 100 to 95 percent of the assessed value) for 2013, and the taxable value will be reduced an additional 5 percent in 2014. Residential property owners, however, received about a 2 percent increase on the taxable value (from 52.8 to 54.4 percent of the assessed value) for 2013. The "rollback" adjusts taxable values that local governments will be use to establish property taxes. Tax liabilities based on the 2013 taxable values are payable in fiscal year 2014-15 and will not be determined until local taxing bodies establish their budgets early next year.
The Iowa House has officially approved a compromise plan, recently passed by the Senate, to cut commercial property taxes. Governor Terry Branstad will sign the legislation designed to reduce commercial property taxes into law on June 12th in Hiawatha.
Iowa is one step closer to cutting commercial property taxes as the State Senate approved a compromise plan in a 43-6 vote. The plan, which will now move to the House for approval, will gradually reduce taxable assessments of commercial properties by 10% and provide property tax credits geared for smaller businesses. The goal of the plan is to stimulate the economy through helping businesses with job creation and returning money to taxpayers.
The Iowa Senate has approved a $250 million commercial property tax credit plan aimed to help smaller and main street businesses. According to the Sioux City Journal, backers say the measure would enable all businesses to be taxed at a lower rate on the first $324,000 of their assessed property value, while commercial entities would have property values above that threshold taxed at the current 100 percent rate.
Iowa Governor Terry Branstad has said that cutting commercial property taxes is a priority for next year. According to the DesMoinesRegister.com, the state's treasury is strong enough that it can replace whatever tax revenue local governments lose when commercial businesses pay less in property taxes. Iowa's property taxes are the third highest in the nation, and predictions call for the state to take in 3% more in tax money in 2013 compared to 2012.
The 2012 Iowa legislative session will likely be known for its failure to once again find a compromise on how to deliver property tax relief to commercial and industrial property owners. According to the Sioux City Journal, members of the Republican controlled House and Democrat-led Senate worked for 122 days on various ways to provide property tax reform without undercutting local governments or shifting tax burdens to homeowners and farmers, and failing to reach a resolution.
Iowa Republican and Democratic legislative leaders have narrowed their differences on plans to overhaul the commercial property tax system, and plan to have approval before this year's session ends. According to Omaha.com, both sides agree that business property taxes are out of line with neighboring states, but the sides take sharply different approaches to solving the problem. A middle-ground seems to be getting closer, but details are still being negotiated.
Iowa Governor, Terry Branstad, wants 2012 to be the year to reform the state's commercial and industrial property taxes, which are among the highest in the nation. According to Branstad, the higher tax rate puts Iowa toward the bottom of the nation in terms of new business start-ups. The goal for Branstad is to lower Iowa's commercial property tax rate by 40% over the next eight years, arguing that the higher taxes are hindering job growth.