FY27 Proposed Budget

However, assessed values of residential properties likely increased for most residents as properties were reassessed. Further, residents will now incur additional sales tax. Other factors also affect actuals, such as property tax credits or exemptions and participation in the City’s low income utility program which was enhanced in FY 2025. Figure 4 illustrates the estimated overall financial impact of tax and fee changes to Iowa City households. The table uses $100,000 in assessed home value with no assessment change so the reader may easily calculate tax payments based on their own home value.

Figure 4: Annual Financial Impact to Residential Households

$1,000 $1,500 $2,000 $2,500

$0 $500

FY2021 FY2022 FY2023 FY2024 FY2025 FY2026 FY2027

Property Taxes

$869

$884

$848

$854

$724

$742

$687

Stormwater

$60

$60

$60

$66

$66

$66

$66

Refuse

$240 $433 $399

$240 $433 $419

$276 $433 $419

$300 $442 $436

$312 $463 $449

$312 $463 $462

$312 $487 $476

Sewer - 800 cubic feet Water-- 800 cubic feet

Total

$2,001 $2,036 $2,036 $2,098 $2,015 $2,045 $2,028 -1.1% 1.8% 0.0% 3.0% -4.0% 1.5% -0.8%

Percent Change

Property Tax Overview

The taxable valuation of property subject to all levies in Iowa City increased approximately 4.9% in Fiscal Year 2027, and assessed growth increased approximately 9.6% over this same period. This follows a recent period of largely stagnant taxable valuations due to falling residential tax rollbacks, increased tax exemptions enacted by the State, and slower building activity coming out of the pandemic. While new construction and higher property values previously made up for the reduction in the taxability of residential and multi-residential properties, this will likely no longer be possible due to the State’s growth penalties on taxable value implemented in the 2023 tax reform. Before FY 2015, multi-residential properties were taxed at 100% of assessed value but have since dropped to the same rate as residential properties. In addition, a higher percentage of the City’s tax base is now exposed to annual fluctuations in residential rollback rate set by the State. For FY 2027, the residential rollback rate is dropping nearly 3 percentage points to 44.5%. This marks the second lowest rate since the late 1970s and places significant pressure on taxable values. In 2023, the State’s property tax reform eliminated both the Emergency and Library levies and added them to the General Fund levy, taking it from $8.10 to $8.57. However, State-mandated growth penalties forced this levy down to $8.40 in FY 2025 and capped it at that amount for FY

23