Property taxes are crushing taxpayers nationwide, and Iowa is no exception. In the past two decades, Iowa’s property taxes have surged by more than 110%, with local governments collecting over $7 billion in fiscal 2025 – a 7% increase from the previous year. This explosive growth far outpaces population growth and inflation, leaving taxpayers struggling to keep their homes and businesses, particularly those on fixed incomes.
The root cause of these rising taxes isn’t increasing property values; it’s excessive government spending. Local governments have expanded their budgets without considering taxpayers’ ability to pay. This disconnect has created a scenario where property owners feel they are merely renting from the government, with the constant threat of being priced out of their homes.
Gov. Kim Reynolds has set a high standard for fiscal discipline at the state level. Her leadership in cutting income taxes and tying state spending growth to population and inflation has strengthened Iowa’s economy and provided much-needed tax relief. But local governments aren’t following the same playbook. Without similar spending restraints, they continue to shift the tax burden onto property owners.
The situation in Texas offers a cautionary example. The state allocated $12.7 billion in surplus funds to reduce school district maintenance and operations (M&O) property taxes. While this provided some relief, the benefits were undermined by excessive local government spending, loopholes in levy limits, and a reliance on raising the homestead exemption to $100,000 rather than reducing tax rates. Texans are still among the country’s most heavily taxed property owners because structural spending issues remain unresolved.
The lesson is clear: Temporary fixes like exemptions or one-time infusions of surplus funds will not solve the property tax crisis unless paired with strict spending controls.
States like Utah and Colorado have shown that lasting relief is possible by focusing on spending discipline. Utah’s Truth-in-Taxation law requires local governments to hold public hearings and justify proposed tax increases, ensuring transparency and accountability. Colorado’s Taxpayer Bill of Rights (TABOR) limits budget growth to the combined rate of population and inflation, creating a sustainable framework for fiscal responsibility.
Iowa needs bold reforms that address the spending side of the equation. Levy limits, such as a maximum of a 2% increase per year, must be imposed without loopholes or exemptions. More importantly, local government spending should reflect the successful approach taken at the state level under Gov. Reynolds. This ensures that taxpayers are not continually squeezed to fund bloated budgets.
The rise in property taxes represents a fundamental failure to adhere to sound economic principles. Taxes should not outpace the private sector that funds them, and government spending should reflect taxpayers’ ability to pay. High property taxes discourage investment, suppress economic growth, and impose a recurring financial burden on property owners that functions as an unrealized capital gains tax.
Iowa must prioritize spending limitations, transparency, and rate reductions to address this crisis. Aligning local government practices with the principles championed by Gov. Reynolds at the state level will ensure that property ownership is a source of stability and pride, not financial anxiety.
Tax and spending are two sides of the same coin. If Iowa’s local governments continue their current trajectory, taxpayers will remain trapped in a cycle of rising property taxes. It’s time for local leaders to follow Gov. Reynolds’ example and embrace fiscal discipline to create a fairer, more prosperous future for all Iowans.
John Hendrickson serves as policy director for Iowans for Tax Relief Foundation. Vance Ginn is a visiting scholar with Iowans for Tax Relief Foundation and formerly served as the former chief economist at the Office of Management and Budget during President Donald Trump’s first administration.
This article was originally published at www.thecentersquare.com
