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Chapter 2

Property tax and local money

How your property tax bill is built, who sets each piece, and where cities, counties and schools get the rest of their money.

How a property tax bill is built

Your bill is one number, but it’s really several taxes stacked together: one for each government that covers your address. Here’s a $200,000 home with a typical rate of $30 per $1,000, for taxes paid in September 2026 and March 2027:

  1. $200,000Assessed value: what the assessor says the home is worth.
  2. 44.53%The residential rollback for FY27: only this share is taxed.
  3. $89,069Taxable value: the assessed value times the rollback.
  4. $30 / $1,000The consolidated levy rate: every government’s rate added together.
  5. $2,672Tax before credits: taxable value ÷ 1,000 × the rate.
  6. − $146Homestead credit if you live there: the tax on the first $4,850 of value.
  7. $2,527Your bill for the year, paid in two halves.

Who sets each piece

The value

The assessor values every property as of January 1, and reassesses every two years. If you think it’s wrong, you can appeal to the board of review each spring.

The rollback

The state sets it each year with a formula that limits how fast residential taxable value can grow statewide. Farmland, business and homes each have their own.

The rates

Each city, county, school district and other body sets its own leviesA property tax a government is allowed to charge for a purpose, such as its general fund, debt or employee benefits. Each has its own rate per $1,000 of taxable value. when it adopts its budget each spring, within limits set by state law.

Where else the money comes from

Local option sales tax

Up to 1% on top of the state sales tax, if voters approve it. The state collects it and sends it back to the cities and county. Who has it.

State payments

Road money from fuel taxes and vehicle fees, and payments that replace property taxes the state has cut through credits. Each city and county page shows them, with and without inflation.

Fees and utilities

Water, sewer and garbage bills, permits and fines. Utility money mostly has to pay for that utility.

How schools are funded

Schools are mostly paid for by the state, through a formula the Legislature adjusts every year.

  1. Count the studentsEach district counts its students every October. That certified enrollment sets the next year’s funding.
  2. Set a per-student amountThe Legislature sets the state cost per pupil each year. The yearly increase is called supplemental state aid.
  3. Local share firstEvery district levies a uniform $5.40 per $1,000 of taxable value toward that cost.
  4. State aid fills the restThe state pays the difference. Districts with less property value get more state aid.
  5. Extra leviesDistricts add their own levies for buildings, equipment, management and more, some only with voter approval.

Open enrollment

A family can send their child to a public school in another district. The child’s home district pays the new district about the state cost per pupil, so money follows the student. School pages show students going out and coming in.

Education savings accounts

Since 2023, the state pays about the state cost per pupil into an account a family can use for private-school tuition. Since 2025–26, any Iowa student can get one. School pages show how many students living in each district use one.

“After inflation”

A budget that grows 3% while prices grow 4% buys less than before. Funnel adjusts past dollars to today’s prices using the consumer price index, so you can compare years fairly.

Check yourself

Pick an answer to see how you did. Nothing is saved.

1. A home is assessed at $200,000. Is it taxed on the whole $200,000?

Yes

Not quite. The residential rollback (44.53% for FY27) sets how much of the value is taxable.

No, only the rollback share, about $89,069

Right. The residential rollback (44.53% for FY27) sets how much of the value is taxable.

2. Who decides your city’s share of the property tax rate?

The county assessor

Not quite. Each government sets its own levies. The assessor only sets the value, and the state sets the rollback and the limits.

The city council, when it adopts its budget

Right. Each government sets its own levies. The assessor only sets the value, and the state sets the rollback and the limits.

The Governor

Not quite. Each government sets its own levies. The assessor only sets the value, and the state sets the rollback and the limits.

3. When a student open-enrolls into another district, what happens to the money?

It stays with the home district

Not quite. The home district pays the receiving district about the state cost per pupil, so a district that loses students loses that funding.

Roughly the state cost per pupil follows the student

Right. The home district pays the receiving district about the state cost per pupil, so a district that loses students loses that funding.

The family pays tuition

Not quite. The home district pays the receiving district about the state cost per pupil, so a district that loses students loses that funding.

Next chapter

The Legislature →

Who's in charge, caucuses and committees, a session start to finish, and how an idea becomes a law.