A new Iowa Farm Bureau analysis shows K-12 school funding reforms approved during the 2026 Iowa legislative session delivered hundreds of millions of dollars in savings to Iowa property taxpayers.

Farm Bureau’s analysis found the changes will result in $146 million in Property Tax Replacement Payment savings this year, $42.2 million in budget guarantee savings for 199 qualifying school districts and $730 million in combined five-year savings from reforms to the Foundation Levy and SAVE, the one-cent statewide sales tax.

“Iowa Farm Bureau has long advocated for property tax reform, and we’re pleased the Legislature included several important policies our members advocated for,” said Iowa Farm Bureau President Brent Johnson. “This reform will provide long-term property tax relief for Iowa homeowners and farmers.”

The rising cost of property taxes has long been a top concern for Iowans. Funding for K-12 schools is a major driver of property taxes in Iowa, accounting for more than half of most Iowans’ property tax bills. 

This year’s legislative reforms reduce the reliance on property taxes for K-12 education, replacing that funding with other revenue sources.


Property Tax Replacement Payments

The Legislature continued funding Property Tax Replacement Payments with the approval of Senate File 2201, ensuring any increases resulting from setting state supplemental aid are paid for by the state instead of shared by the state and property taxpayers. 

The bill saves property taxpayers $146 million this year, an increase of $8.7 million compared to the previous fiscal year. This funding mechanism has been in place since 2013, resulting in more than $1 billion in cumulative property tax savings.

Senate File 2201 also took the unprecedented step to fund the K-12 school budget guarantee from the state’s general fund instead of from property taxes in affected school districts. 

The budget guarantee ensures that school districts receive at least 1% growth from the previous year’s budget despite declining enrollment. This pro­­vision provides $42.2 million in property tax savings for 199 qualifying school districts. 

The Property Tax Replacement Payments and the budget guarantee provisions are passed by the Legislature annually and will need approval in future legislative sessions to continue this property tax relief.


K-12 Foundation Property Tax Levy

The Legislature also passed a comprehensive and historic property tax reform bill, Senate File 2472, which permanently reduces the K-12 Foundation Property Tax Levy rate.

The bill reduces the levy, which is charged on all taxable valuation in the state, from $5.40 to $5.10 in 2029 and reduces it further to $4.90 in 2030 and beyond. 

The funding is replaced with state general fund revenue, holding school budgets harmless. 

The bill also reduces property taxes by gradually increasing the percentage of SAVE (Secure an Advanced Vision for Education) sales tax revenue transferred directly to property tax relief. 

The existing one-cent statewide sales tax was created in 2008 to provide funding for both school infrastructure and direct property tax relief. Speeding up the percentage of SAVE used specifically to reduce K-12 property tax levies will provide significant property tax savings across the state. The reduction of the Foundation Levy and increased percentage of SAVE used for K-12 levy reductions will result in $334 million and $396 million in property tax savings, respectively, for Iowans over the next five years, according to Farm Bureau’s analysis. 

To view the property tax savings provided by these reforms for your state House or state Senate district, go to IowaFarmBureau.com/K-12PropertyTaxSavings.