Nebraska’s Property Tax “Caps” Are Not the Same as Iowa’s

In the summer of 2024, Nebraska lawmakers gathered for a special legislative session focused almost entirely on property tax reform. After years of frustration from taxpayers watching valuations and tax bills rise faster than incomes, lawmakers promised meaningful action to slow the growth of property taxes. 

The result was LB34 designed to place new limits on local property tax growth. 

Supporters described the legislation as a major step toward controlling property taxes. And to Nebraska’s credit, the reforms do create more structure and accountability than existed previously. 

But when compared to Iowa’s recently adopted property tax limitations, an uncomfortable reality becomes clear: Nebraska’s new system is far weaker than many taxpayers likely realize. 

The reason starts with how Nebraska’s new “cap” is actually calculated. 

Under LB34, counties, cities, and villages are generally allowed to increase their property tax request authority each year based on two factors: 

• growth in valuation from new construction and other qualifying growth, and 

• an “inflation percentage” defined in statute as the annual percentage change in “State and Local Consumption Expenditures and Gross Investment.

That second piece is critical. 

Most taxpayers would reasonably assume a property tax cap tied to inflation would use something like the Consumer Price Index (CPI), a measure tied to the actual cost of goods and services consumers experience in everyday life. 

Nebraska did not choose CPI. 

Instead, lawmakers tied allowable property tax growth to a broader government spending metric known as “State and Local Consumption Expenditures and Gross Investment.” In practice, that measure can grow significantly faster than consumer inflation. While CPI inflation was roughly 2.7% to 2.9% last year depending on the measure used, Nebraska’s allowable growth factor over the past year was about 5.7% before even accounting for additional valuation growth from new construction and other qualifying increases. 

That distinction matters because it means Nebraska’s “cap” can still allow local governments to increase property tax requests at rates well above what most taxpayers would traditionally associate with inflation. 

That is where the contrast with Iowa becomes especially important. 

Iowa’s framework is considerably more direct and restrictive. Rather than allowing growth based on a government expenditure metric, Iowa generally limits growth in property tax collections from existing property to 2% annually, excluding new valuation. 

That is a fundamentally different philosophy. 

Nebraska’s system primarily attempts to manage the growth of property tax requests. 

Iowa’s system more directly restrains how much additional revenue governments can collect from existing taxpayers. 

Nebraska’s law includes numerous carveouts and exceptions that further weaken the limitation. Local governments may exceed the base limitation for approved bonds, emergencies, public safety spending, county attorneys and public defenders, voter-approved overrides, and unused carryforward authority from prior years. Political subdivisions may even bank unused authority for future use. 

Maybe the most important limitation of Nebraska’s reform is that the Property Tax Growth Limitation Act itself only applies to counties, cities, and villages. School districts, which make up the largest share of most Nebraska property tax bills, are not directly subject to the new growth limitation structure created under LB34. Instead, the legislation primarily attempts to provide school property tax relief through expanded state-funded tax credits rather than direct caps on school district property tax growth. 

None of this means Nebraska’s reforms were meaningless. But when we look across the river to Iowa, their reforms are  stronger and will have a much larger effect than those implemented in Nebraska in 2024.  

The 2024 special session still represented an acknowledgment from lawmakers that Nebraska’s property tax system is unsustainable. The legislation created enforceable calculations, increased transparency requirements, and established consequences for noncompliance. Those are real improvements. 

But Nebraska taxpayers should also be honest about what was actually passed. 

LB34 is not a hard cap in the way many other states have implemented property tax limitations. It is better described as a growth management system with a generous growth formula and multiple exceptions layered on top. 

Iowa, by comparison, adopted a system that is much more likely to create lasting restraint on the growth of property taxes paid by existing taxpayers. 

As Nebraska lawmakers continue debating long-term tax reform, that distinction matters. If the goal is truly to slow the relentless growth of property taxes, future reforms need to move beyond flexible guardrails and toward firmer, more enforceable limitations on government revenue growth. 

Nebraska took a step forward on property taxes, but the bottom line is; Iowa took a much bigger one.