Bill > SSB1208

Introduced Session

This bill relates to local government property taxes, financial authority, and budgets. DIVISION I —— COUNTY PROPERTY TAXES AND BUDGETS. Code section 331.423 establishes a levy rate limitation for the general county services levy and a limitation for the rural county services levy. The bill modifies the general county services levy rate limitation for fiscal years beginning on or after July 1, 2026, but before July 1, 2031, to be a levy rate not to exceed a levy rate per $1,000 of assessed value equal to 1,000 multiplied by the quotient of 102 percent of the current fiscal year’s actual property tax dollars certified for levy for general county services divided by the remainder of the total assessed value used to calculate taxes for the budget year minus value attributable to new valuation as defined in the bill. For each fiscal year beginning on or after July 1, 2031, the maximum levy rate is the levy rate imposed by the county for the current fiscal year (immediately preceding fiscal year), unless the total assessed value, excluding new valuation, as defined in the bill, used to calculate taxes for general county services for the budget year is equal to or exceeds 102 percent of the total assessed value used to calculate taxes for general county services for the current fiscal year; then the county’s maximum levy rate for general county services shall not exceed a levy rate per $1,000 of assessed value equal to 1,000 multiplied by the quotient of 102 percent of the current fiscal year’s actual property tax dollars certified for levy for general county services divided by the remainder of the total assessed value used to calculate taxes for the budget year minus value attributable to new valuation as defined in the bill. The bill similarly modifies the maximum levy rate for rural county services for fiscal years beginning on or after July 1, 2026. S.F. _____ The division takes effect January 1, 2026, and applies to county taxes and budgets for fiscal years beginning on or after July 1, 2026. DIVISION II —— CITY PROPERTY TAXES AND BUDGETS. Code section 384.1 establishes the city general fund levy and limits on the levy rate. The bill modifies the levy rate limit for fiscal years beginning on or after July 1, 2026, but before July 1, 2031, not to exceed a levy rate per $1,000 of assessed value equal to 1,000 multiplied by the quotient of 102 percent of the current fiscal year’s actual property tax dollars certified for levy for city general services divided by the remainder of the total assessed value used to calculate taxes for the budget year minus value attributable to new valuation as defined in the bill. For each fiscal year beginning on or after July 1, 2031, the maximum levy rate is the levy rate imposed by the city for the current fiscal year (immediately preceding fiscal year), unless the total assessed value, excluding new valuation, as defined in the bill, used to calculate taxes for the budget year is equal to or exceeds 102 percent of the total assessed value used to calculate taxes for the current fiscal year; then the city’s maximum levy rate for general services shall not exceed a levy rate per $1,000 of assessed value equal to 1,000 multiplied by the quotient of 102 percent of the current fiscal year’s actual property tax dollars certified for levy for general services divided by the remainder of the total assessed value used to calculate taxes for the budget year minus value attributable to new valuation as defined in the bill. The bill also establishes a methodology to determine a maximum levy rate for a city that is not imposing a general fund levy in the current fiscal year. The division takes effect January 1, 2026, and applies to property taxes and budgets for fiscal years beginning on or after July 1, 2026. DIVISION III —— SCHOOL TAXES AND BUDGETS. As part of the state school foundation program, for school budget S.F. _____ years beginning on or after July 1, 2022, Code section 257.1 establishes the regular program foundation base to be 88.4 percent of the regular program state cost per pupil. Beginning with the budget year beginning July 1, 2026, the bill increases that percentage each budget year until the percentage is 100 percent for budget years beginning on or after July 1, 2030. Similarly, the bill increases the special education support services foundation base percentage from 79 percent to 100 percent over the same period of budget years. Code section 257.3 requires school districts to levy a foundation property tax of $5.40 per $1,000 of assessed value on all taxable property in the school district. The bill reduces the foundation property tax levy rate over a period of budget years starting with the budget year beginning July 1, 2026, until the levy rate is $2.97 per $1,000 of assessed value for budget years beginning on or after July 1, 2030. Code section 257.3 provides an exception to the foundation property tax levy rate of $5.40 for those school districts that have recently been reorganized. Such districts are provided reduced foundation property tax levy rates for three years following the reorganization. The bill adjusts those reduced rates for reorganizations that take effect on or after July 1, 2026, to reflect the reductions made in the bill to the foundation property tax levy imposed by school districts that are not subject to a reorganization and eliminates certain supplemental aid related to such reorganized school district rates for budget years beginning on or after July 1, 2030. The bill eliminates certain property tax adjustment aid under Code section 257.15(2) and (3) for fiscal years beginning on or after July 1, 2030. The bill eliminates the $24 million general fund appropriation for adjusted additional property tax levy aid under Code section 257.15(4) for fiscal years beginning on or after July 1, 2030. The bill also eliminates the annual appropriation of the balance of the property tax equity and S.F. _____ relief fund under Code section 257.16A for purposes designated under Code section 257.15(4) and requires remaining moneys at the end of a specified fiscal year to be transferred back to the funds from which they were received. The bill eliminates the payment of school district property tax replacement payments for fiscal years beginning on or after July 1, 2030. The bill eliminates the annual appropriation of moneys in the foundation base supplement fund for fiscal years beginning on or after July 1, 2030, and requires the remaining moneys at the end of a specified fiscal year to be transferred for deposit in the secure an advanced vision for education fund. The bill eliminates transfers from the secure an advanced vision for education fund to the property tax equity and relief fund and the foundation base supplement fund for fiscal years beginning on or after July 1, 2030. In Code chapters 425A (family farm tax credit) and 426 (agricultural land tax credit), the bill replaces references to the school foundation property tax levy rate ($5.40) with citations to the appropriate provision of the Code section establishing the foundation property tax rate. The bill requires each school district with an unexpended fund balance in the district’s management levy fund under Code section 298A.3 at the conclusion of the fiscal year beginning July 1, 2024, that exceeds an amount equal to the total expenditures from the district’s management fund for the fiscal year beginning July 1, 2024, to certify such unexpended fund balance and expenditure amounts, including any reserved or designated amounts in the fund and the purposes therefor, to the school budget review committee by November 15, 2025. The committee is then required to conduct a review of the unexpended fund balances and expenditures of school district management levy funds certified under the bill. By February 1, 2026, the committee shall make recommendations to the general assembly for the establishing district management levy fund S.F. _____ unexpended fund balance limitations for fiscal years beginning on or after July 1, 2027, including recommendations for limitations based on a percentage of the district’s management levy fund expenditures and recommendations for management levy limitations and expenditure requirements for excess funds. The bill also amends Code section 298.4 by providing that for fiscal years beginning on or after July 1, 2027, if a school district’s unexpended fund balance of the district’s management levy fund is equal to or exceeds a specified percentage of the average annual expenditures from the district’s management levy fund for the three consecutive fiscal years immediately preceding the base year, the board of directors may not certify a district management levy for the fiscal year. Additionally, if a school district is not prohibited from certifying a levy under the bill, the maximum amount that the board of directors may certify for levy under this Code section shall be an amount equal to the remainder of a specified percentage of the average annual expenditures from the district’s management levy fund for the three consecutive fiscal years immediately preceding the base year minus the district’s management levy fund unexpended fund balance for the fiscal year preceding the base year. Except for the section of the division amending Code section 257.31, this division of the bill takes effect July 1, 2026. DIVISION IV —— PROPERTY VALUATIONS AND ASSESSMENT LIMITATIONS. Code section 441.21 provides that the actual value of agricultural property shall be determined on the basis of productivity and net earning capacity and that any formula or method employed to determine productivity and net earning capacity of property shall be adopted in full by rule of the department of revenue. The bill amends that provision by specifying that for assessment years beginning on or after January 1, 2026, structures on agricultural land constructed on or after January 1, 2026, that are not agricultural dwellings shall not be included in determination of productivity and net S.F. _____ earning capacity of agricultural property and shall not be allocated any portion of the total county productivity value so determined. Such agricultural structures shall instead be valued under Code section 441.21(2) and the structure’s assessed value subject to taxation shall be equal to the product of the structure’s value multiplied by the agricultural factor, as determined in 701 IAC 102.3(2) or succeeding rule of the department. Code section 441.21(4) establishes the calculation for assessment limitations (rollback) for residential property and agricultural property. The bill strikes the calculation of the residential property assessment limitation for assessment years beginning on or after January 1, 2025, and strikes the provision within the agricultural property assessment limitation calculation that limits growth of residential or agricultural property to the growth in the other classification (ag-residential tie). The bill establishes a schedule of assessment limitations for residential property that increases year assessment year from the assessment year beginning January 1, 2025, until the assessment limitation reaches 100 percent for assessment years beginning on or after January 1, 2029. By operation of the scheduled increases to the residential property assessment limitation, the assessment limitation applicable to that portion of commercial, industrial, and railway property that is equal to or less than $150,000 is also increased. During that period of scheduled increase, the bill also increases the 90 percent assessment limitation on the portion of commercial, industrial, and railway property that exceeds $150,000 until that percentage is 100 percent. The bill makes similar changes to other assessment limitations applicable to other classifications of property, including utility property. The bill modifies provisions governing the calculation of payments made to local governments under Code section 441.21(5)(e) that are made to replace property taxes due to the S.F. _____ application of the residential property assessment limitation to certain portions of commercial and industrial property valuations and eliminates the appropriation for such payments for fiscal years beginning on or after July 1, 2030, due to elimination of the assessment limitations. DIVISION V —— DISABLED VETERAN AND HOMESTEAD CREDITS AND EXEMPTIONS. HOMESTEAD CREDIT. Over a period of years, the bill replaces the homestead property tax credit, other than the portion of the credit provided to certain disabled veterans, with a homestead property tax exemption. Currently, the homestead credit is an amount equal to the levy on the first $4,850 of actual value for each homestead. For the assessment year beginning January 1, 2026, the homestead credit equals the levy on the first $3,640 of actual value. For the assessment year beginning January 1, 2027, the homestead credit equals the levy on the first $2,430 of actual value. For the assessment year beginning January 1, 2028, the homestead credit equals the levy on the first $1,220 of actual value. The bill eliminates the homestead credit, other than the homestead credit reserved for disabled veterans, commencing with the assessment year beginning July 1, 2029. HOMESTEAD EXEMPTION. The bill modifies the homestead exemption by increasing the current $6,500 taxable value exemption amount and eliminating the requirement that an owner be 65 years of age or older. For the assessment year beginning January 1, 2026, the exemption amount increases to $4,680, except for owners 65 and older, who remain at $6,500. For the assessment year beginning January 1, 2027, the exemption amount increases to $10,500. For the assessment year beginning January 1, 2028, the exemption amount increases to $18,500, and for assessment years beginning on or after January 1, 2029, the exemption amount is $25,000. DISABLED VETERAN. The bill moves the disabled homestead S.F. _____ credit from Code section 425.15 to Code section 425.1, and makes changes to the scope of the disabled veteran homestead credit for new applicants. Currently, a disabled veteran with a 100 percent permanent and total disability rating receives a homestead credit on the entire amount of tax levied on the homestead. The bill specifies that a separate application form is required to claim the disabled homestead credit. The bill does not change the homestead credit for an eligible disabled veteran who makes an application for the homestead credit before July 1, 2025. For a disabled veteran who makes an application for the homestead credit on or after July 1, 2025, the bill changes the definition to “homestead” to exclude appurtenances and limits the size of the homestead credit to property on one-half acre. REIMBURSEMENT. The state continues to reimburse local governments for the homestead credit, as determined under the bill, including the disabled veterans homestead credit under the bill, but does not reimburse local governments for the homestead exemption under current law and in the bill. This division of the bill applies to assessment years beginning on or after January 1, 2026. DIVISION VI —— MILITARY SERVICE PROPERTY TAX EXEMPTION. Under current law, a veteran receives a property tax exemption of $4,000 in taxable value on property owned by the veteran. The bill increases the veterans property tax exemption from $4,000 to the following exemption amounts: for the assessment year beginning January 1, 2025, $5,000; for the assessment year beginning January 1, 2026, $6,000; for assessment years beginning on or after January 1, 2027, $7,000. The division applies retroactively to assessment years beginning on or after January 1, 2025. DIVISION VII —— PROPERTY TAX LEVY RATES. The bill establishes a reduction for rate-limited property tax levies. The bill defines “rate-limited property tax levy” to be any ad valorem property tax levy limited by law to a specific property S.F. _____ tax levy rate per $1,000 of assessed value used to calculate taxes, but does not include the school district foundation levy under Code section 257.3, the county general services levy under Code section 331.423(1), the county rural services levy under Code section 331.423(2), or the city general fund levy under Code section 384.1(3). For each fiscal year beginning on or after July 1, 2026, each rate-limited property tax levy may only be imposed if the governmental entity imposed such levy for the fiscal year beginning July 1, 2025, and shall, by operation of the bill, be limited to a levy rate that is equal to 1,000 multiplied by the quotient of 102 percent of the current fiscal year’s actual property tax dollars certified for such levy divided by the total assessed value used to calculate such taxes for the budget year. The bill also provides that, on or after July 1, 2025, a city or county shall not issue bonds or other indebtedness payable from an ad valorem property tax levy for the purpose of funding the general operations of the city or general operations of the county, as applicable, or otherwise use proceeds from the sale of bonds or issuance of other indebtedness to fund general operations. The bill defines “general operations” to mean services or activities generally funded from the governmental entity’s general fund, which are necessary for the operation of the governmental entity, including salaries and benefits, or which are for the health and welfare of the governmental entity’s citizens or primarily intended to benefit all residents of the governmental entity, but excluding services financed by statutory funds other than a debt service fund. The city finance committee is required to adopt rules under Code chapter 17A for cities to implement the new Code section governing funding of general operations. The county finance committee is required to adopt rules under chapter 17A for counties to implement the new Code section governing funding of general operations. S.F. _____ DIVISION VIII —— ELDERLY PROPERTY TAXES —— LOW INCOME. The bill modifies the eligibility for the property tax credit for persons ages 70 and older under Code chapter 425, subchapter II. Currently, a person filing a claim for the property tax credit who is at least 70 years of age and who has a household income of less than 250 percent of the federal poverty level is eligible to receive a specified credit amount against property taxes due on the claimant’s homestead. The bill increases the household income threshold for eligibility from less than 250 percent of the federal poverty level to less than 350 percent of the federal poverty level. The division applies to assessment years beginning on or after January 1, 2026. DIVISION IX —— BRUCELLOSIS AND TUBERCULOSIS ERADICATION FUND —— LEVY. Code section 165.18 authorizes the secretary of agriculture to direct the board of supervisors of each county to levy an amount sufficient to pay the expenses estimated to be incurred from the brucellosis and tuberculosis eradication fund for the following fiscal year, subject to a maximum levy of 33.75 cents per $1,000. The bill strikes the authority to levy such a tax beginning with property taxes due and payable in fiscal years beginning July 1, 2025.

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No sponsors listed

Other Sponsors (1)

Subcommittee recommends amendment and passage. (on 03/27/2025)

Official Document