The Iowa House Republicans are highlighting new state revenue figures showing a larger-than-expected drop in General Fund revenue for Fiscal Year 2025.
According to the non-partisan Legislative Services Agency, the state took in just over $8.93 billion — that’s $816 million less than Fiscal Year 2024, a decline of 8.4%. It also fell short of projections made at the end of the 2025 legislative session by about $192 million.
The primary driver behind the drop is a sharp decline in revenue from the pass-through entity tax, or PTET. This tax, paid by partnerships and S-corporations, generated $862 million over the past few years due to retroactive collections. But in FY 2025, it brought in only $175 million — a $687 million drop from last year.
Despite the overall decline, House Republicans point to some positives. Even after cutting personal income tax rates to a flat 3.8% in January, the state still saw a $43 million increase in income tax collections. Sales and use taxes were also up slightly, while corporate tax collections declined by $40 million.
House Republicans say the numbers reflect a strong economy even amid tax relief.
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