Iowa general fund net revenue fell $816.6 million in fiscal 2025; Revenue Estimating Conference to set new estimates Oct. 16

Eric Richardson, senior fiscal analyst at the Iowa Legislative Services Agency, said in a September 2025 video memo that final net general fund revenue for fiscal year 2025 decreased by $816,600,000, a decline of 8.4% from fiscal year 2024. Richardson said the state now has final fiscal‑year figures because accounting accruals that move late deposits and refunds back to the fiscal year in which the economic activity occurred were completed in September.

Richardson emphasized the effect of pass‑through entity (PTE) tax flows on the year‑over‑year totals. He said other taxes fell largely because net PTE tax revenue totaled about $175 million in FY2025, down from about $862 million in FY2024 — a decline of roughly $687 million. That reduction in PTE revenue was the main driver of the overall drop in general fund receipts, Richardson said.

The memo broke out other major revenue changes for FY2025 (all figures after accrual adjustments and net of refunds): individual income tax net receipts rose by $43 million, sales and use taxes rose by $36 million, corporate income tax receipts fell by $40 million, and nontax revenue fell by $14 million. Richardson also noted that gross individual income tax revenue declined by about $96 million year over year while refunds tied to tax year 2024 were approximately $139 million lower in FY2025, contributing to the modest net increase of $43 million in net individual income tax receipts (about a 1.1% increase).

Richardson discussed the role of recent tax law changes in shifting receipts. He said legislative changes affecting passthrough entity treatment and recent state individual income tax rate changes, together with newly enacted federal limits on state-and-local tax (SALT) deductions, will continue to affect Iowa general fund revenue and are under ongoing analysis. He did not provide additional legislative citations in the memo and did not present new revenue estimates at that time.

Looking at the current fiscal year, Richardson said net general fund revenue through Oct. 1, 2025, was down about $205 million (11.1%) compared with the same fiscal‑year basis after adjusting for accruals. He said that decrease was driven mainly by a $142 million drop in net individual income tax so far in FY2026. Richardson said income tax withholding from tax year 2025 was expected to slow through January 2026 and to stabilize by February 2026 as withholding patterns and the 2025 income tax rate change work through payroll collections.

Richardson closed by saying the Revenue Estimating Conference — the legislature’s technical revenue panel — will consider the final FY2025 numbers and adopt new revenue estimates for fiscal years 2026 and 2027 at its next meeting on Oct. 16, 2025.

Sources: September 2025 Iowa General Fund monthly revenue video memo, Eric Richardson, Iowa Legislative Services Agency.