Homestead Exemption Calculations

Attention: Assessors and Auditors,

Under Iowa Code chapters 425 and 561, homestead credits and exemptions apply to a "homestead" as defined under Iowa Code section 425.11(1)(d) and Iowa Code chapter 561. A homestead may consist of multiple parcels or less than a whole parcel. For the 10% homestead exemption and the 65+ homestead exemption, a homestead includes the dwelling and appurtenances and up to one-half acre (within a city plat) or forty acres (if outside a city plat). Iowa Code §§ 561.1, 561.2, and 561.3.

For the purposes of the disabled veteran property tax credit, the definition of homestead is limited to the dwelling (with no appurtenances) and up to one-half acre of land (regardless of whether it is in a city plat or not) for applications submitted on or after July 1, 2026. Iowa Code § 425.1(2)(b)(6)(b) as amended by 2026 Iowa Acts, SF 2472, signed by the Governor on May 18, 2026, replaces the homestead tax credit with a homestead tax exemption in the amount of 10% of the taxable value of the homestead.

When the number of net taxable acres on a parcel receiving a homestead benefit exceeds the statutorily defined limits, the taxable land value used in the calculation of the exemption or credit should be adjusted as follows:

• Maximum Acres divided by Net Taxable Acres times Land Value
• Maximum Acres = The total acres allowable for the calculation of the exemption or credit as described above
• Net Taxable Acres = The sum of the acres from all parcels associated with the homestead minus the sum of exempt acres, excluding the homestead exemption, from those parcels
• Land Value = The value of the land

If the assessor determines that the value of the homestead, as determined under Iowa law, differs from the value produced by the calculation described in this memorandum, the assessor should value the homestead at the value the assessor determines is correct under Iowa law.

Example A:

To calculate the land value used in the homestead exemptions, take the maximum number of acres (40) divided by the Net Taxable Acres (80) and multiply by the land value ($20,000) which equals $10,000.

To calculate the land value used in the Disabled Veteran Homestead credit, take the maximum number of acres (0.5) divided by the Net Taxable Acres (80) and multiply by the land value ($20,000) which equals $125.

The total exempt homestead value would be $110,000, which is the sum of the dwelling value and the exempt homestead land value. The total disabled vet homestead value would be $100,125, which is the sum of the dwelling value and the disabled vet homestead land value.

The 10% homestead exemption amount would be $11,000, which is 10 percent of the total exempt homestead value. Because the minimum amount of this exemption is $5,500 and the maximum amount of this exemption in assessment year 2026 is $20,000, the exemption amount remains $11,000.

Example B:

To calculate the land value used in the homestead exemptions, take the maximum number of acres (0.5) divided by the Net Taxable Acres (2) and multiply by the land value ($10,000) which equals $2,500. Since the max number of acres for the Disabled Vet Homestead is the same, the land value result is the same.

The total exempt homestead value would be $202,500, which is the sum of the dwelling value and the exempt homestead land value. The total disabled vet homestead value would also be $202,500, which is the sum of the dwelling value and the disabled vet homestead land value.

The 10% homestead exemption amount would be $20,000. 10% of the total exempt homestead value would be $20,250, and because the maximum amount of this exemption in assessment year 2026 is $20,000, the exemption amount is $20,000.

Visit Homestead Tax Credit and Exemption for more information. If you have questions, please contact [email protected].