tr?id=&ev=PageView&noscript=

Iowa’s coming tax cuts wouldn’t cover current spending

Iowa’s coming tax cuts wouldn’t cover current spending

Iowa Republicans have worked to pass a number of tax cuts aimed at reducing corporate and individual income taxes. A projection of those cuts has Iowa's taxes not bringing in enough money to cover current expenses.

By Zachary Oren Smith

October 18, 2024
iowa voting guide promo

The impact of Republican tax slashing is on the horizon as projections for state tax cuts dip below current state spending.

The state is spending more money than it will be taking in under future tax cuts. Under Gov. Kim Reynolds’ leadership, the Iowa Legislature has cut income tax rates for individuals and corporations. Those cuts began taking effect in January of this year. 

The Revenue Estimating Conference published a projection Thursday of the state’s future tax revenue based on an analysis by a nonpartisan panel that estimates future tax revenues.

The projection of fiscal year 2026—which doesn’t start until next July 2025—had Iowa’s revenue sitting at $8.7 billion. Nearly 90% of those receipts come from personal income and sales taxes. Less than 9% of Iowa’s tax revenue comes from corporations. For Iowa’s current state fiscal year, spending sits at $8.9 billion.

That’s a $200 million difference.

Currently, many state legislators are in the middle of reelection campaigns. But come next spring, the body will be tasked with balancing a budget. The Legislature will have to find a place to cut or a source of money to plug the hole. This could be from unspent funding or from the $3.7 billion Taxpayer Relief Fund.

“That means Iowans get to keep more of what they earn, and that’s how it should be,” Reynolds said in a statement. “Our state’s fiscal health remains strong, and Iowa’s economy continues to grow.”

Sen. Janet Petersen, D-Des Moines, said that while revenues are down, income caps on the private school voucher program are set to expire next year, opening the program to all students. 

“Republican lawmakers’ and Gov. Reynolds’ priorities put private school vouchers and corporate tax giveaways ahead of our kids in public schools, seniors in nursing homes, and tax relief for working families,” Petersen said in a statement.  “Their private school voucher scheme is growing, and the state’s revenues are declining. That’s not a winning combination.”

  • Zachary Oren Smith

    Zachary Oren Smith is your friendly neighborhood reporter. He leads Starting Line’s political coverage where he investigates corruption, housing affordability and the future of work. For nearly a decade, he’s written award-winning stories for Iowa Public Radio, The Des Moines Register and Iowa City Press-Citizen. Send your tips on hard news and good food to [email protected].

CATEGORIES: STATE LEGISLATURE
Related Stories
Iowa Republicans want to ban local bans on conversion therapy

Iowa Republicans want to ban local bans on conversion therapy

Iowa Republicans are continuing their attack on Home Rule in the Legislature this year, this time going after bans on widely discredited conversion therapy for minors. Iowa Sen. Sandy Salmon—a Republican from Janesville who represents Bremer, Butler, Chickasaw and...

What to expect from Iowa House Dems in 2024 legislative session

What to expect from Iowa House Dems in 2024 legislative session

House Minority Leader Jennifer Konfrst (D-Windsor Heights) and her Democratic colleagues know Iowans are exhausted and disappointed by the Iowa Legislature. “We hear from people all the time: ‘This is not the state I grew up in,’ and they're concerned and they're...

Share This