Iowa Disabled Veteran Homestead Tax Credit

This is the most valuable veteran benefit in Iowa and the one whose published law is most out of date. Read the note on where the text lives before relying on anything. Where the text lives. Until the 2026 session this credit was Iowa Code section 425.15. The 2026 property tax act, 2026 Iowa Acts chapter 1115 (S.F. 2472, approved May 18, 2026), struck section 425.1, subsection 2 and rewrote it to carry the credit at section 425.1, subsection 2, paragraph "b", then repealed section 425.15 outright at section 145 of that act. The division applies retroactively to assessment years beginning on or after January 1, 2026. The Iowa Code edition published on legis.iowa.gov was printed on December 9, 2025 and still shows section 425.15 as live law, so a veteran or an assessor reading the Code online today is reading a repealed section. The Department of Revenue has already moved: form 54-049, revised July 14, 2026, cites "Iowa Code section 425.1(2)(b) and Iowa Administrative Code rule 701-110.1(3)". The operative text is the act. What the credit is worth. "the homestead credit allowed on the homestead shall be the entire amount of tax levied on the homestead". Not a dollar figure, not a percentage of value, not a fixed exemption. The whole property tax bill on the qualifying homestead. The Department of Revenue states it plainly: "There is no limit on the amount of the exemption." There is no income test. A published guide circulating in 2026 puts a figure of $3,432 on this credit; no such cap exists in Iowa law and treating it as a capped amount would understate the benefit by whatever the rest of the bill comes to. Four routes in, and they are alternatives. First, a veteran of any of the military forces of the United States who acquired the homestead under 38 U.S.C. sections 21.801 or 21.802 prior to August 6, 1991, or under 38 U.S.C. sections 2101 or 2102. Those are the specially adapted housing grant provisions. Note what this route does not require: no Iowa residency at the time of service, no wartime period, and no stated disability percentage. If VA built or adapted the house, the route is open on that fact. Second, a veteran as defined in section 35.1 with a permanent service-connected disability rating of one hundred percent as certified by VA, or a permanent and total disability rating based on individual unemployability that is compensated at the one hundred percent rate. Third, a former member of the national guard of any state who otherwise meets the service requirements of section 35.1, subsection 2, paragraph "b", subparagraph (2) or (7), with the same one hundred percent or individual unemployability rating. The words "of any state" matter: a twenty-year Kansas or Nebraska guard veteran who now owns an Iowa homestead reaches this route. Fourth, an individual who is a surviving spouse or a child receiving dependency and indemnity compensation under 38 U.S.C. section 1301 et seq., as certified by VA. The state veterans department's benefits page gives only two of those routes. It describes the credit as for "100% disabled service-connected veterans and Dependency and Indemnity Compensation (DIC) recipients", which leaves out the specially adapted housing route and individual unemployability paid at the one hundred percent rate. Both are in the act, and the Department of Revenue's form 54-049 lists them. Claim on the form, not the summary. Iowa defines individual unemployability more narrowly than VA does, and this is the trap in the second and third routes. The statute says "permanent and total disability rating based on individual unemployability" means "a condition under which a person has either a permanent service-connected disability rating of sixty percent or two or more permanent service-connected disability conditions in which one of the conditions has at least a forty percent rating and the combined rating for all the conditions is at least seventy percent", plus the administrative adjustment for individual unemployability. That is the schedular test in 38 C.F.R. 4.16(a) written into Iowa law. VA can and does grant individual unemployability outside those numbers on an extraschedular basis under 38 C.F.R. 4.16(b). A veteran whom VA pays at the one hundred percent rate through extraschedular individual unemployability does not meet Iowa's own definition on its face. Raise it with the assessor and the county veterans service officer rather than assuming either answer; the point here is that the Iowa definition is not a restatement of VA's. The one hundred percent rating must be permanent. A one hundred percent rating that is not marked permanent, or that is subject to a scheduled future examination, is a different thing from a permanent one, and the certification VA issues will say which. Surviving spouses and children, both ways in. Two mechanics operate and they are not the same. Continuation. For an owner in the first, second or third route, "the credit allowed shall be continued to the estate of an owner who is deceased or the surviving spouse and any child, as defined in section 234.1, who are the beneficiaries of a deceased owner, so long as the surviving spouse remains unmarried". Remarriage ends it. The DIC route. A surviving spouse or child receiving DIC qualifies in their own right, and that route ends only "upon termination of dependency and indemnity compensation". The Department of Revenue draws the consequence expressly: "A surviving spouse who receives DIC payments is eligible for the credit even upon remarriage." Federal DIC can continue on remarriage at or after age 57, so a surviving spouse who remarries late keeps the Iowa credit through the DIC route even though the continuation route would have ended it. If the spouse moves, or the homestead never carried the credit while the veteran was alive, the Department asks for a current DIC or Compensation and Pension Death letter. The half-acre change, which is the 2026 headline. The Department of Revenue states both versions. For an application filed before July 1, 2026, the homestead was "1/2 acre for properties located within city limits and 40 acres outside city limits" and it "includes the house and any appurtenances". For an application filed on or after July 1, 2026, "the homestead is limited to one-half acre and does not include appurtenances". Owners who had already filed continue without refiling under section 147 of the act. So a disabled veteran living on an Iowa acreage who filed in June 2026 has a full exemption on up to forty acres and the outbuildings, and a neighbour in identical circumstances who files in August 2026 has a full exemption on half an acre of it. This is not a figure that moved; it is a structural cut of roughly 98 percent of the covered land for new claimants, and it is already in force. You must elect, and the election costs you the other exemption. "An owner or a beneficiary of an owner who elects to secure the credit provided in this paragraph is not eligible for the credit provided in paragraph 'c' or any other real property tax credit or exemption provided by law for veterans of military service." Form 54-049 makes the claimant certify "I have not and will not claim during this calendar year, a military service tax exemption on any property located in Iowa." In practice the election is easy: this credit is the whole tax bill and the chapter 426A military service exemption is $4,000 of taxable value, so nobody who qualifies here should be taking that instead. Note that the 2026 wording is broader than the old section 425.15, subsection 3, which barred only other veteran exemptions; the new text also bars the general homestead credit in paragraph "c". Filing. File with the city or county assessor by July 1 of the assessment year, together with the Homestead Tax Exemption form 54-028. The Department's example: "a claim filed by July 1, 2026 will apply to assessment year 2026 and taxes due and payable in September of 2027 and March of 2028." An application received after July 1 applies to the following assessment year. Bring the application, a DD-214, and "a current Benefits Paid letter issued within 12 months of your application date", and that twelve-month currency requirement is administrative and is not in the statute. The Department asks that you not send personal health information. No reapplication. Once filed and allowed, the claim runs for successive years without further filing so long as the property stays owned and used as a homestead by a qualifying person on July 1 of each year. You must notify the assessor in writing if circumstances change so that you become ineligible, if you convey the property, or if it stops being your homestead. If you acquire a different homestead the credit may be claimed on the new one. Care facilities and absence. "If you are confined in a nursing home, extended-care facility, or hospital, you can still receive the credit if you are the owner of the homestead, maintain the homestead, and do not lease, rent, or otherwise receive profits from the homestead." Renting the house out ends it. Your name is confidential, with one exception that works in your favour. The list of names and addresses of individuals allowed this credit "is confidential information and shall not be disseminated to any person unless otherwise ordered by a court or released by the lawful custodian". But on request the recorder, assessor or other entity may share it with a county veterans service officer "for purposes of providing information on benefits and services available to veterans and their families". So the one office that can use the list to find you is the one whose job is to find you.