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Iowa general fund revenue down $629 million in FY2025; PTET drop is largest factor
Summary
State net general fund revenue fell 7.1% (about $629 million) through June 30, 2025, the Legislative Services Agency reported, with a 77.8% drop in pass-through entity tax receipts accounting for the largest single decline; final totals remain subject to year-end accruals and refunds.
Eric Richardson, Senior Fiscal Analyst at the nonpartisan Iowa Legislative Services Agency, said Iowa's net general fund revenue decreased 7.1% — a decline of $629,000,000 — for fiscal year 2025 through June 30, 2025.
"Net general fund revenue decreased 7.1 percent and $629,000,000 when compared to the same period of fiscal year 2024," Richardson said in the agency's June monthly video memo.
Richardson broke the change down by tax type: individual income tax receipts rose about 1% and sales and use tax receipts rose about 1.5% for the period, while corporate income tax receipts fell about 5.7%.
The largest contributor to the overall decline was a fall in net insurance and other taxes, which decreased 54.9% for FY2025. Richardson attributed most of that decrease to a 77.8% drop in pass-through entity tax (PTET) receipts; PTET totaled $199,000,000 in FY2025, a decline of $699,000,000 from FY2024.
Richardson also cautioned that accounting and timing effects influence year-to-year comparisons. He said May 2025 sales-tax deposits were due June 30 in FY2025 (a weekday), producing 13 months of monthly sales-tax receipts in the FY2025 data set, versus 11 months in the FY2024 data when June 30 fell on a weekend. That timing, he said, "strengthens FY2025 data."
He noted an accrual accounting item: $165,000,000 that had been held in the general-fund suspense account was moved into the state general fund sales tax revenue source on July 1, 2025. Because that reclassification occurred outside the reporting window for this memo, Richardson said the July 1 total is not included in the FY2025 totals in this report but will be reflected during the year-end accrual and close.
Richardson compared the results to the Revenue Estimating Conference's March projection. He said the REC set a FY2025 growth rate for total net receipts (without transfers) of negative 6.1% at its March meeting, and that net revenue through June finished slightly below that projection.
The analyst emphasized the preliminary nature of the monthly figures: the fiscal-year books remain open and additional transactions, including some tax payments and refunds, will be processed through mid-September. "Final revenue growth for the fiscal year will be dependent on refund processing and accrued tax payments," he said.
The Legislative Services Agency plans to publish the next monthly video memo in early August.
