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Iowa general fund revenue falls 7.1% in FY2025; PTET decline and corporate receipts weigh on totals
Summary
Iowa's net general fund revenue for fiscal year 2025 declined 7.1% compared with FY2024, driven by a steep drop in pass-through entity tax receipts and lower corporate income taxes, state fiscal analysts said.
Iowa's net general fund revenue for fiscal year 2025 decreased 7.1 percent, a decline of $629 million compared with the same period in fiscal year 2024, Eric Richardson, senior fiscal analyst for the Iowa Legislative Services Agency, said in the agency's June monthly revenue video memo.
Richardson said individual income tax grew about 1 percent and sales and use tax grew 1.5 percent for the period, while corporate income tax receipts fell about 5.7 percent. He said net insurance and other taxes decreased 54.9 percent “primarily due to a decrease of 77.8 percent from the pass through entity tax or PTET, which totaled $199,000,000 during FY 2025, a decrease of $699,000,000 from FY 2024.”
The memo also flagged timing effects in sales tax reporting that affected year-to-year comparisons. Richardson said the monthly due date for May 2025 sales tax was June 30 in FY2025 because June 30 fell on a weekday, while in FY2024 the June 30 collection was postdated to July because June 30 fell on a weekend. As a result, the FY2025 data as compiled for the memo included 13 months of monthly sales-tax receipts compared with 11 months in the FY2024 data, which strengthens the FY2025 sales-tax figure for the fiscal-year comparison.
Richardson reported $124 million was deposited into the general fund’s suspense account on June 30 without a designation to its revenue source. He said that on July 1 — outside the time frame of the report — $165 million was moved out of the suspense account into the state general fund sales-tax revenue source; that July 1 transfer is not included in the FY2025 totals in the June report but “will be included as FY 2025 revenue during the accrual period and as part of the year end close.”
Richardson noted the Revenue Estimating Conference established a fiscal-year 2025 growth rate for total net receipts (without transfers) of negative 6.1 percent at its March meeting. At the conclusion of June, net general fund revenue growth was slightly below that projection, he said. The agency also reminded viewers that the state’s books remain open through mid-September and that final FY2025 totals will depend on additional accrued tax payments and processed refunds.
The memo closed with a reminder that additional transactions and refunds processed after the reporting cutoff could change the final fiscal-year totals; Richardson said viewers should expect the next monthly video memo in early August.
