SF 29 (LSB 1119XS (3) 91)

SENATE FILE 29

BY  McCLINTOCK

A BILL FOR

An Act relating to property tax exemptions by changing the homestead tax exemption to a credit for owners attaining sixty-five years of age and increasing the military service tax exemption, and including effective date and retroactive applicability provisions.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

DIVISION I
HOMESTEAD TAX CREDIT FOR ELDERLY OWNERS

    Section 1.  Section 425.1A, subsection 1, paragraph b, Code 2025, is amended to read as follows:
   b.  For the assessment year beginning January 1, 2024, and each succeeding assessment year, the eligible homestead, not to exceed six thousand five hundred dollars in taxable value.
    Sec. 2.  Section 425.17, subsection 2, paragraph a, subparagraphs (1) and (3), Code 2025, are amended to read as follows:
   (1)  A person filing a claim for credit under this subchapter who has attained the age of sixty-five years but who has not attained the age of seventy years on or before December 31 of the base year, a person filing a claim for credit or reimbursement under this subchapter who is totally disabled and was totally disabled on or before December 31 of the base year, or a person filing a claim for reimbursement under this subchapter who has attained the age of sixty-five years on or before December 31 of the base year and who is domiciled in this state at the time the claim is filed or at the time of the person’s death in the case of a claim filed by the executor or administrator of the claimant’s estate.
   (3)  A person filing a claim for credit under this subchapter who has attained the age of seventy sixty-five years on or before December 31 of the base year, who has a household income of less than two hundred fifty percent of the federal poverty level, as defined by the most recently revised poverty income guidelines published by the United States department of health and human services, and is domiciled in this state at the time the claim is filed or at the time of the person’s death in the case of a claim filed by the executor or administrator of the claimant’s estate.
    Sec. 3.  Section 425.23, subsection 1, paragraph c, subparagraph (2), Code 2025, is amended to read as follows:
   (2)  The If the claimant has attained the age of seventy years on or before December 31 of the base year, has a household income of less than two hundred fifty percent of the federal poverty level, as defined by the most recently revised poverty income guidelines published by the United States department of health and human services, and is domiciled in this state at the time the claim is filed or at the time of the person’s death in the case of a claim filed by the executor or administrator of the claimant’s estate, the difference between the actual amount of property taxes due on the homestead during the fiscal year next following the base year minus the actual amount of property taxes due on the homestead during the first fiscal year for which the claimant filed a claim for a credit calculated under this paragraph “c” and for which the property taxes due on the homestead were calculated on an assessed valuation that was not a partial assessment and if the claimant has filed for the credit calculated under this paragraph “c” for each of the subsequent fiscal years after the first credit claimed.
    Sec. 4.  Section 425.23, subsection 1, paragraph c, Code 2025, is amended by adding the following new subparagraph:
   NEW SUBPARAGRAPH.  (3)  Six thousand five hundred dollars.
    Sec. 5.  EFFECTIVE DATE.  This division of this Act, being deemed of immediate importance, takes effect upon enactment.
    Sec. 6.  RETROACTIVE APPLICABILITY.  This division of this Act applies retroactively to assessment years beginning on or after January 1, 2025.
DIVISION II
MILITARY SERVICE TAX EXEMPTION

    Sec. 7.  Section 426A.11, subsection 2, paragraph b, Code 2025, is amended to read as follows:
   b.  The property, not to exceed four thousand dollars in taxable value for the assessment years beginning on or after January 1, 2023, but before January 1, 2025, of an honorably separated, retired, furloughed to a reserve, placed on inactive status, or discharged veteran, as defined in section 35.1, subsection 2, paragraph “a” or “b”.
    Sec. 8.  Section 426A.11, subsection 2, Code 2025, is amended by adding the following new paragraph:
   NEW PARAGRAPH.  c.  For assessment years beginning on or after January 1, 2025, the property of an honorably separated, retired, furloughed to a reserve, placed on inactive status, or discharged veteran, as defined in section 35.1, subsection 2, paragraph “a” or “b”, equal to the lesser of the actual value of the property and an amount equal to four thousand dollars divided by the quotient of the property’s consolidated levy rate per one thousand dollars divided by one thousand dollars.
    Sec. 9.  IMPLEMENTATION.  Section 25B.7 does not apply to the exemption in this division of this Act.
    Sec. 10.  EFFECTIVE DATE.  This division of this Act, being deemed of immediate importance, takes effect upon enactment.
    Sec. 11.  RETROACTIVE APPLICABILITY.  This division of this Act applies retroactively to assessment years beginning on or after January 1, 2025.
EXPLANATION
The inclusion of this explanation does not constitute agreement with
the explanation’s substance by the members of the general assembly.
   This bill relates to property tax exemptions by changing the homestead tax exemption for certain elderly persons to a credit for owners attaining 65 years of age and increasing the military service tax exemption.
   DIVISION I —— HOMESTEAD TAX CREDIT FOR ELDERLY OWNERS. Under Code section 425.1A, the homestead tax exemption for owners attaining 65 years of age shall not exceed $6,500 of taxable value. Owners attaining the age of 65 and 70 years of age, respectively, are also eligible for an additional credit if the owner meets certain income requirements under Code section 423.23.
   The bill changes the homestead tax exemption for owners attaining the age of 65 years from a $6,500 exemption to a credit of at least $6,500 on the actual taxes payable on an eligible homestead.
   The bill makes conforming changes to the additional credit in Code chapter 425, subchapter II.
   The division takes effect upon enactment and applies retroactively to assessment years beginning on or after January 1, 2025.
   DIVISION II —— MILITARY SERVICE TAX EXEMPTION. Under current law, all honorably discharged veterans are entitled to a property tax exemption of $4,000 in taxable value. The bill increases the property tax exemption amount to an amount that is equal to the lesser of the actual value of the property and an exemption amount that is equivalent to a $4,000 credit on the actual taxes payable on a property owned by an eligible veteran.
   Code section 25B.7 does not apply to the division, and as a result, a political subdivision is required to extend the credit to eligible veterans.
   The division takes effect upon enactment and applies retroactively to assessment years beginning on or after January 1, 2025.