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Iowa General Fund receipts fall $453 million year-to-date; REC trims 2026 forecast
Summary
A nonpartisan fiscal analyst reported that through April 1 Iowa General Fund net receipts fell $453 million (7.7%), with sales tax up but individual, corporate and franchise taxes down; the Revenue Estimating Conference cut its FY2026 forecast, projecting an $831 million decline for the year.
Eric Richardson, senior fiscal analyst at the nonpartisan Iowa Legislative Services Agency, said through April 1 on a fiscal-year basis net General Fund receipts decreased $453 million, or 7.7 percent, compared with the prior year. "Through April 1st on a fiscal year basis, net receipts decreased $453 million and 7.7%," Richardson said in the March 2026 monthly video revenue memo.
Richardson said the year-to-date picture is mixed by tax source: net sales and use tax receipts rose 7.6 percent for the fiscal year, while net individual income tax fell 15 percent, net corporate income tax fell 39 percent, and net franchise tax fell 34.6 percent. He attributed the drop in individual income tax largely to the flat 3.8 percent income tax rate that was fully in effect for FY 2026 and said corporate declines reflect both economic conditions in manufacturing and agriculture and tax changes from the One Big Beautiful Bill Act (OBA). "The One Big Beautiful Bill Act has created numerous tax incentives that are expected to reduce corporate income tax liability," Richardson said.
On the receipts composition, Richardson reported gross revenues through April 1 decreased 8.2 percent while refunds dropped 18.2 percent, producing net growth at minus 7.7 percent. He also noted gross sales tax deposits increased 7.6 percent, but transfers from the General Fund to the School Infrastructure Fund rose about 5 percent, which reduces net General Fund sales-tax receipts.
Richardson summarized month-to-month contributors: growth through April 1 was $32 million higher than the growth calculated through March 3, with miscellaneous taxes adding $56 million and sales and use tax adding $45 million, partially offset by a $32 million decline in individual income tax return revenue; total tax refunds increased by $18 million since March 3.
The Revenue Estimating Conference (REC), Richardson said, met March 12 and lowered the current-year estimate by $46 million compared with the December projection. Specific REC adjustments included a $73 million reduction in income tax estimates and an $87 million reduction in corporate income tax estimates, partly offset by an estimated $120 million reduction in refunds. Under the REC numbers, fiscal year 2026 net revenue was projected to decline $831 million, or 9.3 percent, from actual FY 2025 net revenue. Richardson added that the REC also trimmed the December FY 2027 estimate by $27 million while calling for a $361 million (4.4 percent) increase relative to the revised FY 2026 estimate.
Richardson said the income tax rate cut to a flat 3.8 percent is now embedded in year-over-year comparisons and should stabilize withholding going forward, but that OBA-related revenue impacts are expected to weigh on General Fund growth for the remainder of FY 2026. He closed by directing viewers to the next monthly video memo, expected in early May.
