2026 Government Relations Legislative Update - Week 10

Capitol Update

The second funnel week began slowly, as inclement weather forced the cancellation of floor debate in both chambers. Activity resumed Tuesday, with lawmakers returning to committee and floor work to advance legislation ahead of today’s second funnel deadline.

This week also saw renewed movement on property taxes, as the House Ways and Means Committee unveiled a strike-after amendment. Chair Carter Nordman (R-Dallas) said the proposal is intended “to provide relief and predictability to Iowans while ensuring long-term fiscal discipline at the local level.” Among other provisions, the amended proposal would:

1. Caps local tax revenue at two percent year over year;
2. Limits local government reserve accounts to 35% of the budgets;
3. Prohibits property tax bonds from being used for general operations;
4. Increases the business property tax exemption from $150,000 to $350,000;
5. Creates an immediate 10% exemption (up to $25,000) for residential property taxpayers;
6. Increases the percentage of SAVE money that will go to property tax relief;
7. Requires county auditors to submit partial level data annually to the Dept. of Management;
8. Provides future TIF Districts are limited to twenty years;
9. Removes the school aid foundation and emergency medical levies from available increments through TIF;
10. Shifts the burden of proof on assessors when valuation increase by more than 10%;
11. Creates an appropriation of $10M for a government efficiency grant program administered through Iowa State University and their extension offices;
12. Creates a FirstHome Iowa program modeled after the state’s 529 education savings accounts;
13. Updates the form for property tax statements that are mailed to taxpayers to ensure they are easier to read and understand;
14. Eliminates TIF usage for school levies on data centers located in TIF districts;
15. Provides that bond elections can occur on June or November in a singular calendar year; and
16. Allows counties to increase the EMS levy from $0.75 to $1.50 by a vote of the people.

In other tax-related developments, the House advanced a retroactive tax increase on health maintenance organizations (HMOs) for FY 2026. The proposal would raise the premium tax rate from 0.925% to 3.5% from January 1 through September 30, 2026, before lowering it to 0.95% beginning in October 2026. House File 2739 cleared the House Appropriations Committee on a 14–10 vote Wednesday and passed the full House on a 53–40 vote Thursday. In addition to the tax changes, the bill would transfer $296.2 million from the Taxpayer Relief Fund and $70.3 million from the general fund to support the Iowa Department of Health and Human Services Medicaid program.

Separately, multiple bills have been introduced to increase the state’s tobacco tax. House File 2406, sponsored by five House Republicans, and House File 2664, sponsored by eight House Democrats, would each raise the cigarette tax by $1.50 per pack. A recent survey released by the Iowa Health Initiative showed that two-thirds of Iowans support this tax increase.

In non-tax related news, the House advanced Senate File 378 which would increase the default speed limit on Iowa highways and roads without a designated speed limit from 55 to 60 miles per hour. The proposal carries over from last year, when it passed the Senate on a 36-12 vote.

Scene on the Hill

 March 18, 2026: Members of the Iowa Cattlemen’s Association connect with lawmakers, staff, and fellow attendees at their annual legislative breakfast.