1. The value of property is established.
The assessor (or the Iowa Department of Revenue) estimates the value of each property. This is called the "assessed value." The assessed value is to be at actual or market value for most property taxes.
2. The assessments of all taxable properties are added together.
The assessor totals the assessed value in each classification and reports it to the county auditor.
3. The Department examines total assessed values and equalizes them.
Each assessor sends the reports, called "abstracts," to the Iowa Department of Revenue. The abstract shows the total values of all real property in each jurisdiction by classification of property, not by individual property.
A process called "equalization" is applied every two years to ensure that property values are comparable among jurisdictions and complies with Iowa code.
In addition, the "assessment limitation" is applied every year by the auditor. This process is commonly called "rollback" and is used in response to inflation. The application of the rollback results in taxable value in most cases.
4. Budgets are established.
Each taxing authority determines its own budget. The budget includes the cost of providing services, the amount of aid received from the federal and state governments, the amount of money remaining from previous years, and revenue from other charges for services.
Each approved budget is submitted to the county auditor.
5. A tax rate is established.
The county auditor divides the amount of the budget that is not funded by other sources by the taxable value of all the property in the taxing district.
The result is referred to as "dollars per thousand." For example, If the dollars per thousand were $10, the tax on a home valued at $50,000 would be calculated at $10 x 50. The tax on that home would be $500 for that single taxing authority.
The rates for all authorities are added together, resulting in a single tax levy called a consolidated levy for each unique set of taxing districts. The consolidated levy rate is always the result of two or more tax rates established by different government entities.
6. Credits are subtracted.
Credits such as the Homestead Credit are subtracted before a final tax bill is sent to the taxpayer.