Property Tax - Assessment Limitations

Iowa Code sections 441.21(4) and 441.21(5) provide for the reduction of property tax valuations via assessment limitations (sometimes referred to as “rollback”). The Iowa Department of Revenue computes assessment limitation percentages and county auditors multiply the assessed valuations by the assessment limitations to determine taxable valuations

The assessment limitations are applied according to class of property as follows:

  • For the agricultural and residential classes of real estate, the taxable valuation for each class is limited to 3% annual statewide growth from revaluation. If either agricultural or residential property increases by less than the allowable limit, both classes of property are limited to the same lower percentage.
  • The assessed valuation for commercial and industrial property is set by statute at 90% for the amount of assessed valuation greater than $150,000 for each property unit. For the property unit valuation $150,000 and less is equal to the residential assessment limitation. See Iowa Code section 441.21(5)(f)(3) as amended by House File 2552 for the definition of “property unit”
  • The taxable valuation for utility property is limited to 8% annual statewide growth
  • The assessed valuation for railroad property is equal to the assessment limitation percentages for commercial property

Assessment limitations are computed for properties classified as residential and agricultural by taking the statewide aggregate prior year's taxable value and adding the allowed percent of growth to the aggregate, then dividing the result by the statewide aggregate total of the prior year's assessed value plus the current year's change from revaluation. Revaluation reflects inflationary impacts to the class of property.

An assessment limitation percentage is applied uniformly to each and every assessed value in the state for a class of property. Even though the state's total taxable value will only increase by the allowed percentage of growth, the resultant taxable values for individual properties may change by different percentages. An individual parcel’s assessed valuation may not change at the same rate as the statewide aggregate percentage change. Taxpayers whose assessed values have increased by more than the statewide average will experience net increases in the taxable values that are greater than the allowed percent of statewide aggregate growth.