Iowa General Fund revenue falls 8.9% in FY2026; income and corporate taxes drive decline
July 02, 2026 | Revenue Estimating Conference, Legislative, Iowa
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Eric Richardson, senior fiscal analyst for the Iowa Legislative Services Agency, said Iowa General Fund net revenue for fiscal year 2026 through June 30 decreased 8.9%, a decline of about $733 million compared with the same period in fiscal 2025. "Net general fund revenue decreased 8.9% and $733 million when compared to the same period of fiscal year 2025," Richardson said.
Richardson said the decline was concentrated in income taxes and corporate receipts. Individual income tax receipts fell 17.5% and corporate income taxes fell 26.9% for the period, while sales and use tax receipts increased 7.9%. "Individual income tax decreased 17.5%, sales and use tax increased 7.9% for the period while corporate income tax decreased 26.9%," he said.
He also reported a large year‑over‑year drop in inheritance tax receipts — an 80.7% decline — tied to the elimination of the inheritance tax effective Jan. 1, 2025. "Inheritance tax decreased 80.7% in FY2026 as the inheritance tax was eliminated beginning January 1st 2025," Richardson said.
Richardson flagged changes in other categories that reduced receipts. Net insurance and other taxes decreased 11.8%, in part because pass‑through entity tax receipts totaled $62 million in FY2026, a $95 million decline from FY2025. Richardson said other revenues fell 15.6%, driven primarily by a roughly $41 million drop in interest paid to the General Fund.
He noted that $18 million in cigarette and tobacco tax receipts that currently appear in general fund other taxes are required by law to be transferred to the healthcare trust fund. "There is currently $18 million in net cigarette and tobacco tax from FY2026, currently included in general fund other taxes that is required by law to be transferred to the healthcare trust fund," he said.
Richardson placed the numbers in context, presenting a nine‑year fiscal‑year growth chart and noting FY2026 is the fourth straight year of negative revenue growth since FY2022. He also compared the results to the Revenue Estimating Conference's March projection, which had forecast a 9.5% decline for FY2026; the actual decline through June of 8.9% was slightly smaller than that projection. "The Revenue Estimating Conference established a fiscal year 2026 growth rate for total net receipts without transfers of negative 9.5% at its March meeting on a fiscal year basis," he said.
Final FY2026 totals remain subject to accounting rules and later transactions: Richardson said the state's fiscal books remain open through mid‑September to record tax payments and refunds that are due or processed after June 30, and that final revenue growth will depend on refund processing and accrued tax payments.
The video memo closes with Richardson thanking viewers and noting the next monthly memo will be posted in early August.
Richardson said the decline was concentrated in income taxes and corporate receipts. Individual income tax receipts fell 17.5% and corporate income taxes fell 26.9% for the period, while sales and use tax receipts increased 7.9%. "Individual income tax decreased 17.5%, sales and use tax increased 7.9% for the period while corporate income tax decreased 26.9%," he said.
He also reported a large year‑over‑year drop in inheritance tax receipts — an 80.7% decline — tied to the elimination of the inheritance tax effective Jan. 1, 2025. "Inheritance tax decreased 80.7% in FY2026 as the inheritance tax was eliminated beginning January 1st 2025," Richardson said.
Richardson flagged changes in other categories that reduced receipts. Net insurance and other taxes decreased 11.8%, in part because pass‑through entity tax receipts totaled $62 million in FY2026, a $95 million decline from FY2025. Richardson said other revenues fell 15.6%, driven primarily by a roughly $41 million drop in interest paid to the General Fund.
He noted that $18 million in cigarette and tobacco tax receipts that currently appear in general fund other taxes are required by law to be transferred to the healthcare trust fund. "There is currently $18 million in net cigarette and tobacco tax from FY2026, currently included in general fund other taxes that is required by law to be transferred to the healthcare trust fund," he said.
Richardson placed the numbers in context, presenting a nine‑year fiscal‑year growth chart and noting FY2026 is the fourth straight year of negative revenue growth since FY2022. He also compared the results to the Revenue Estimating Conference's March projection, which had forecast a 9.5% decline for FY2026; the actual decline through June of 8.9% was slightly smaller than that projection. "The Revenue Estimating Conference established a fiscal year 2026 growth rate for total net receipts without transfers of negative 9.5% at its March meeting on a fiscal year basis," he said.
Final FY2026 totals remain subject to accounting rules and later transactions: Richardson said the state's fiscal books remain open through mid‑September to record tax payments and refunds that are due or processed after June 30, and that final revenue growth will depend on refund processing and accrued tax payments.
The video memo closes with Richardson thanking viewers and noting the next monthly memo will be posted in early August.
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