City of Iowa City news release

City of Iowa City explains anticipated changes in property taxes

People who live or own property in Iowa City will soon receive a letter mandated by the State of Iowa about next year’s property taxes. This letter states that City taxes on homes will increase by an average of 12.7%, while taxes on businesses will go up by 14.0%. Unfortunately, these numbers may cause confusion as they do not accurately reflect what most taxpayers can expect.

For the Fiscal Year ending June 30, 2026 (FY26), the City of Iowa City is proposing to keep the same property tax rate. At the same time, property assessments should not change this year unless improvements were made (building an addition, finishing a basement, etc.). However, the State of Iowa is raising the residential property tax rollback rate, which means more of each property’s value is subject to property taxes.  As a result, most owners should not expect large increases in City property taxes.

Expected Percentage Increase in City Property Tax

Change Stated in Taxpayer Letter	Actual Expected Change
Residential Property	12.7%	2.3%
Commercial Property	14.0%	<2.3%*

*Properties with a higher assessed value will see a smaller increase in taxes

Based on the factors above, most residential property owners can expect an increase in City property taxes of around 2.3%. While there is more variation for commercial property owners, they should generally expect an increase that is less than 2.3%. However, property owners that improved their property should see taxes increase due to a higher assessed value. In those cases, growth will depend on the value of improvements.

The City Council will gather public input about its tax rates at a public hearing on April 1, 2025. The City is proposing a maximum property tax rate that is the same as last year at just over $15.63 per $1,000 of assessed value. The new rate will be finalized when Council approves the budget for FY26, which cannot be higher than the proposed amount.

If you want to learn more about City property taxes and share your thoughts, you can watch public meetings live on City Channel 4 or the City’s Facebook page. You can also attend public meetings in person or join online through Zoom. More details can be found at www.icgov.org/councildocs.