Did you know your assessed value is NOT your taxable value? The various taxing jurisdictions apply tax rates to your taxable value, not your assessed value. Your assessed value is just the market value of your home. What is the taxable value? Taxable value is the part of your assessed value that is taxable. Just like not all of your income is taxable—not all of your house is taxable!
In Iowa increases in assessed values for residential and agricultural property are subject to an assessment limitation formula. This formula does exactly what it appears to do. It limitsthe amount your property assessment (and therefore taxes) can increase year over year.
If the statewide increase in values of homes and farms, classified as residential or agricultural properties, exceeds 3 percent, the values of those properties are limited so that the total increase in aggregate value statewide is 3 percent. Iowa does not limit individual property from increasing in assessed value by more than 3 percent—it does that for the entire class of property. Some will increase more than 3 percent and some will decrease. But the overall the increase will be 3 percent or less.
Why do some Iowans see their assessed value increase by double digits like 20%? The Department of Revenue calculates a rollback rate. The Department will figure out how much of your assessed value should actually be taxed so as to not violate the 3 percent assessment limitation. The 2022 rollbacks were ordered last week and are:
- Agricultural—91.6430%
- Residential—56.4919%
This represents the percentage of your assessed value will actually be taxed (will have the tax rates applied to it). The main reason Iowa does this is to keep Iowan’s property taxes as predicable and stable as possible. It does not solve all issues—but it strikes the balance between wanting to give property owners some predictability without locking assessments on an individual property basis and forcing local governments to live in constant unpredictability.
