Relating to the abatement of property taxes owed on property owned by certain volunteer emergency services providers and including effective date and applicability provisions

Description

Senate File 635 creates a new property tax abatement for certain volunteer emergency services providers in Iowa. To qualify, individuals must have served as a volunteer for at least five years, earn less than $5,000 annually from their emergency service, and remain in good standing with their volunteer agency. The abatement applies to property taxes assessed on the volunteer’s homestead, with a maximum annual abatement of $500.

For volunteers with 10 or more years of service, the Bill provides a lifetime property tax abatement up to $500 so long as they continue to reside within the local service area of the agency where they previously volunteered. The application process requires volunteers to submit a petition to their county board of supervisors by October 31, with final determinations made by December 31. The tax abatement is then applied to the upcoming fiscal year. The Bill takes effect upon enactment and applies to property taxes due and payable on or after July 1, 2026 (FY 2027).

Background

Iowa currently offers limited financial incentives for volunteer emergency service providers. The Volunteer Fire Fighter, Emergency Medical Services (EMS) Personnel, and Reserve Peace Officer Income Tax Credit allows eligible individuals to claim an income tax credit of up to $250 if they meet service requirements. Some counties or municipalities may offer local incentives such as small stipends or reimbursement programs for training and equipment. Iowa’s current Volunteer EMS Providers as of 2023 are as follows:

• Volunteer Fire Fighters: 14,500
• Reserve Police Officers: 937
• Volunteer Emergency Medical Care Providers: 6,533

Assumptions

• All counties in Iowa will implement the proposed abatement.
• The Bill creates an abatement, not a credit, meaning revenue losses will be absorbed by local taxing authorities.
• The Bill will take effect in the 2025 assessment year, which corresponds with FY 2027.
• Property tax losses will be distributed proportionally across all local levies and special assessments.
• The estimated number of eligible volunteers is based on available data from State and national sources:
• 21,970 volunteer emergency service providers statewide. This is assumed to remain constant.
• 81.8% of volunteers are homeowners, which means 17,971 volunteers would be eligible for the abatement.
• 64.0% of volunteers have at least five years of service, reducing the estimated number of eligible applicants to 11,502.
• The average home under this abatement is estimated to have an assessed value of $250,600 in FY 2025.
• The residential assessment limitation is 47.43% for FY 2027.
• Property values and tax rates are expected to increase annually in line with the Consumer Price Index, averaging 2.3% growth per year.
• The average abatement per volunteer is estimated at $402 in FY 2027, increasing to $441 by FY 2031 due to property value growth.

Fiscal Impact

The Bill is estimated to decrease property tax revenues for local governments by $4.6 million in FY 2027, increasing to $5.1 million by FY 2031. Figure 1 illustrates the estimated statewide impact of SF 635 on local taxing authorities.

Figure 1 — Estimated Impact of SF 635

Sources

• Department of Revenue
• United States Census Data