The Legislature passed a $9.6 billion FY2027 budget (up 1.43% from last year). Key priorities: property tax reform and eminent domain reform for carbon pipelines.

Property Tax Reform (SF2472 — awaiting Governor’s signature)

Estimated $4 billion in property tax cuts over six years. Key changes include:

–  2% annual cap on local government general fund levy growth

–  10% homestead exemption up to $20,000, adjusted for inflation

–  Multi-residential properties reclassified separately starting in 2027, with rollbacks phased in (This is tax increase of 6% phased in over 3 years)

–  TIF districts limited to 23 years; usage capped at 60% after 20 years

–  Business Property Tax Credit maintained at $150,000, but the $125M state backfill is redirected to a Tax Relief Fund

Constitutional Amendment: Supermajority to Raise Income Taxes (SJR11 — headed to November ballot)

The proposed constitutional amendment would require a two-thirds supermajority vote of both chambers to increase individual or corporate income tax rates, replacing the current simple majority threshold.

The measure passed the House 57-21 on May 3. Having now cleared two consecutive General Assemblies, it will appear on the November 3 ballot for voters to approve or reject.

Key context for businesses:

–  Iowa’s income tax rate is currently a 3.8% flat tax, the result of recent Republican-led cuts

–  The amendment would apply to both individual and corporate income tax rates

–  Supporters call it a safeguard against future tax increases; opponents argue it limits future legislatures’ ability to manage budget shortfalls

–  Iowa’s FY2027 budget carries a roughly $1.2 billion gap between revenues and spending, currently planned to be covered by the state’s Taxpayer Relief Fund

Venture Capital Investment (SF2453 — awaiting Governor’s signature)

Regents institutions (UI, ISU, UNI) will be required to invest 1% of unrestricted endowment assets into state-certified Iowa Innovation Funds by July 1, 2027. This could channel an estimated $39-49 million into Iowa startups. A waiver process exists if market conditions make compliance impractical.

Specialty Business Court (SF639)

Iowa will establish a dedicated business court with two judges to handle complex commercial litigation faster. It applies to cases involving $500,000 or more in damages related to:

–  Business contracts, fraud, or statutory violations

–  Technology and IP licensing

–  Trade secrets and non-competes

–  Commercial real estate disputes

–  Shareholder or class action suits

DEAD BILLS:

–  Right to repair

–  Energy omnibus

–  Penny rounding