DES MOINES, Iowa — A recent report released by the Legislative Services Agency shows that revenues for the state of Iowa declined by over 8% last fiscal year and are expected to decline again this fiscal year.

According to the non-partisan agency’s report released last week, final net revenues for the state in FY 2024 totaled $9.7 billion, while net revenues totaled $8.9 billion in FY 2025, an 8.4% decline.

Several things likely impacted the decline in revenue, the report notes, which includes the passing of a flat individual income tax rate of 3.8%, the exemption of retirement income from the individual income tax, and the Pass-Through Business Tax and Deduction Act, among others.

The report also states that as of September, net revenue is down 14.9% from this time last year and estimates that revenue for FY 2026 could total over roughly $8.3 billion, an estimated decline of 5.2% from FY 2025’s net revenue, excluding any transfer revenue, of over $8.8 billion.

You can read the full revenue report below:

State Auditor Rob Sand, who’s running for governor in the upcoming 2026 election, said in a press release on Monday that if this trend continues the deficit for FY 2026 could be pushed over $1 billion. Sand also said that these findings show a decline of almost $200 million more than the Revenue Estimating Conference projected in March, and that this would be the state’s first yearly budget deficit since 2017.

“I warned of a fiscal time bomb back in May, and now we are seeing it detonate before our very eyes,” Sand said. “The decline in state revenues is even worse than anticipated, raising serious concerns about funding for services that Iowa’s families and communities depend on.”

The Revenue Estimating Conference is scheduled to meet again on October 16.