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Report says state of Iowa's revenue declined over 8% in FY 2025, projects further decline

Iowa's fiscal year 2025 revenue fell by $816.6 million, an 8.4% decrease, with projections showing a potential $1 billion deficit in 2026 due to tax cuts and budgeting issues.

  • On June 30, 2025, the Legislative Services Agency reported FY 2025 revenues fell $198 million short of the Revenue Estimating Conference's March $9.020 billion forecast for the fiscal year July 1, 2024 through June 30, 2025.
  • Accelerated tax cuts from a 2024 law and the Education Savings Account program, plus reliance on one-time federal funds, contribute to Iowa's revenue decline, critics say.
  • State Auditor Rob Sand warned trends point to an over $1 billion deficit for FY 2026 and Iowa's first yearly budget shortfall since 2017, raising concerns for Iowa families and communities.
  • Gov. Kim Reynolds' office said Iowa has a $2.1 billion surplus, $850 million in reserves, and $4.1 billion in the Taxpayer Relief Fund, and the Revenue Estimating Conference will meet Oct. 16.
  • Critics warn opponents say planned draws from the Taxpayer Relief Fund and surplus clash with five-year plans and could strain Iowa's economy amid agricultural headwinds.
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Iowa state revenue fell 8.1% in fiscal year 2025, nonpartisan agency report finds

The state of Iowa’s general fund revenue for fiscal year 2025 is roughly $200 million less than predicted when state lawmakers were moving forward with the budget, according to a Legislative Services Agency report.

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WHO-DT broke the news in on Monday, October 6, 2025.
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