Real Estate Taxes: Real Property Tax Relief
10 Percent and 2.5 Percent Rollbacks, and Homestead
Exemption, by County, Distributed During Calendar Year
State law (Section 319.302) requires the county auditor,
after application of the tax reduction factors (see
publication PD-23) in accordance with Section 319.301, to
reduce all real property taxes by 10 percent. In addition,
Section 323.152(B) requires the county auditor to further
reduce the real property tax on owner-occupied property an
additional 2.5 percent. Owner-occupants who are age 65 or
older or who are permanently and totally disabled may qualify
for further reduction in their real property taxes by
applying for a homestead exemption under Section 323.152(A).
A homestead exemption is granted for aged or disabled
owner-occupants if their total income does not exceed $16,500
($20,800 beginning in tax year 1995).
Local governments are reimbursed in full from the state
general revenue fund for these tax reductions. The Department
of Education reimburses the schools for their share of the
tax reductions and the Tax Commissioner reimburses the
counties, townships, municipalities, and special taxing
districts for their shares of the tax reductions per Section
321.24(F) and Section 323.156. The county auditor also
receives 2 percent of the amount reimbursed under Section
323.152 as payment for administering the homestead exemption
and 2.5 percent rollback.
Table PD-1 indicates that for tax year 1994, the Departments
of Taxation and Education together reimbursed local
governments a total of $732.8 million, including $596.8
million for the 10 percent rollback, $50.2 million for the
homestead exemption, and $85.7 million for the 2.5 percent
rollback. Another $0.8 million was reimbursed by the
Department of Taxation for refunds issued by the county to
taxpayers that filed "late" applications for the tax year
1994 homestead exemption and 2.5 percent rollback reductions.
Additionally, $2.7 million was paid by the Departments of
Taxation and Education to county auditors for administering
the homestead exemption and 2.5 percent rollback.