The Iowa Revenue Estimating Conference on Oct. 16, 2025 adopted Legislative Services Agency (LSA) revenue estimates for fiscal years 2026 and 2027 after hearing officials report that fiscal year 2025 net general fund revenue declined by $816,600,000, or 8.4%, from the prior year.

The action confirms the revenue assumptions the state will use to meet FY2026 appropriations and to set spending thresholds for FY2027, a director for the conference said during the meeting.

Director Jennifer Acton, who opened the substantive briefing, said, “A little over 3 weeks ago, the books closed for f y 20 25. Net general fund revenue, including transfers for the year, decreased 816,600,000.0 or a minus 8.4% compared to f y 20 24.” She told members that fiscal year 2026 is the first full fiscal year in which Iowa’s individual income tax rate will be 3.8% and said recent federal and state tax changes are the primary drivers of the revenue outlook.

Acton summarized economic indicators that influenced the conference’s deliberations: the conference board consumer confidence index fell 3.6% in September to 94.2 from 97.8 in August; the Federal Reserve’s target federal funds range was reported at 4% to 4.25%; national GDP figures were mixed while Iowa experienced volatile quarterly results; and Iowa’s unemployment rose to 3.8% in August 2025 from 3% in March 2025. “Declining consumer confidence could be concerning if trends continue,” she said.

Acton also cited agricultural and trade pressures: variability in crop yields, lower commodity prices, and China’s shift in soybean purchases away from some U.S. suppliers. She said recently enacted federal legislation — referenced in the meeting as the OBBBA — would increase take-home income for some taxpayers (for example, by removing taxes on tips and overtime and increasing the standard deduction) while also reducing federal taxable income that rolls through to the state under Iowa’s conformity with the Internal Revenue Code.

An executive-branch representative told the conference that the executive and legislative branch recommendations differed by about 1.2%, and that the recent federal tax changes and the state’s 3.8% flat individual income tax account for most of the downward revision. The executive representative said the state remains in a strong cash position, noting cash on hand and reserves: “The state has over $6,000,000,000 in cash on hand. Fiscal year 25 closed with ending balance of around $900,000,000. The reserve funds are at their statutory maximums, and the taxpayer relief fund has a balance over $4,000,000,000,” the representative said.

After discussion, conference members voted to adopt the LSA’s recommended estimates for both fiscal year 2026 and fiscal year 2027 and to adopt the reported gambling revenue and transfer figures. Each action was approved by voice vote during the meeting.

Votes at a glance: FY2026 and FY2027 revenue estimates and associated transfers were adopted by voice vote; the meeting record indicates the ayes prevailed on each motion and each item was adopted. The conference also approved the agenda and minutes of the March 2025 REC meeting.

The conference adjourned after completing the scheduled reviews and votes.