Hunter
10/09/25
Final figures are in for fiscal year 2025, and Iowa’s general fund revenue was roughly $200 million less than predicted.
That’s according to a report from the nonpartisan Legislative Services Agency. It says the state collected $8.8 billion in the fiscal year covering July 1, 2024, through June 30, 2025. This is a drop of $780 million in revenue, or 8.1%.
Iowa Capitol Dispatch reports part of this funding decrease was expected, as Gov. Kim Reynolds signed a law in 2024 speeding up previously approved income tax cuts. When state legislators reconvened for the 2025 legislative session, Republican leaders said they were expecting to draw from the Taxpayer Relief Fund, as well as the state’s $2 billion budget surplus and reserve accounts to make up for the expected shortfall caused by the tax cuts.
State Auditor Rob Sand and other Democrats have criticized both the move to a single 3.8% income tax rate, as well as the state’s Education Savings Account program awarding public funding for private school tuition and associated costs.
Democrats have warned these GOP-backed initiatives will cause major issues as the state draws from its reserves.
Iowa is also expected to bring in less money in future years due to other factors than the state’s tax law changes. Last month, Governor Kim Reynolds said some of the individual and corporate income tax law changes approved through the federal “One Big Beautiful Bill Act” will also result in a decrease for Iowa’s general fund revenues in fiscal year 2026 totaling over $437 million. Financial struggles in the agricultural sector are also expected to affect Iowa’s economy.
The Revenue Estimating Conference is scheduled to meet next Thursday at the Iowa State Capitol.