Iowa general fund receipts fall $232 million through Aug. 1; timing and a January tax cut explain most of the drop

Eric Richardson, senior fiscal analyst at the nonpartisan Iowa Legislative Services Agency, said the state’s net general fund receipts for the July 1–Aug. 1 reporting period declined by $232,000,000 compared with the same period a year earlier. "The revenue decrease for the period totaled $232,000,000, a 24.3% year to date revenue decrease," Richardson said.

Richardson said the largest single component of the decline was individual income tax receipts. "Individual income tax decreased $109,000,000 or 24% over the period," he said, adding that this fall is "likely due to the income tax rate decreasing to a flat 3.8% as of 01/01/2025." He cautioned that the word "likely" reflects an attribution based on timing and known policy changes rather than a causal analysis in the memo.

The remainder of the decline—about $106,000,000 in "other taxes"—was described as largely a product of accounting and calendar mechanics rather than an immediate change in economic activity. Richardson explained that the state's tax deposit process, revised in November 2021, and the use of a suspense account have created month‑to‑month volatility. Because the May 2024 sales tax monthly due date was post‑dated to July 1, 2024 (since June 30 fell on a weekend), FY2025 received two months of sales tax deposits in that early period compared with a single month in FY2026, inflating the year‑over‑year decline for July activity.

Richardson cited specific suspense‑account swings tied to calendar effects: a $71,000,000 positive suspense balance on the first business day of FY2025 (driven by due‑date extensions) and a $126,000,000 negative suspense balance on the first business day of FY2026 when monthly due dates returned to June 30. He said those timing shifts "created a large decrease in suspense account deposits in July 2025 compared to July 2024." The memo includes a historical chart of other‑tax gross deposits over the past 22 years showing relatively little movement through FY2022 and larger fluctuations after the November 2021 deposit process change.

On broader performance, Richardson noted that FY2025 revenue growth was negative 7.1%, below the Revenue Estimating Conference projection of negative 6.1% for total net receipts without transfers, and that final revenue calculations for FY2025 will not be available until October. "While it does appear at this time that FY2026 revenue growth remains below the REC projection made in March, final revenue calculations will not be available until October," he said.

Richardson closed by urging viewers to review the August report for a clearer picture of FY2026 trends and said the next monthly video memo will be posted in early September.