Publications

January 2026

To set a course for the future, it’s helpful to understand how you got where you are. After years of tax cuts skewed to the wealthy, Iowa now faces a billion-dollar deficit. To fill the gap, lawmakers plan to tap surpluses, built up in large part thanks to a pandemic-era revenue bubble. But the surpluses, expected to drop 41% by the end of FY 2027, just two years after their peak, are going fast.  

We are truly at a crossroads. 

On one path forward — one without new sources of revenue to balance the budget — Iowans can expect to see their health, safety and education on the chopping block. There is little fat to cut after decades of restrained budgeting.

But there is a better path forward: one where we recapture the revenue we need to support great schools, affordable health care and other services Iowans value — and in turn help build thriving communities and a stronger economy. 

October 16, 2025

The state Revenue Estimating Conference today projected that net revenue for the current fiscal year, FY 2026, will be $804 million lower than FY 2025, which ended in July — a 9.1% drop. This forecast reflects the impacts of state tax cuts passed over the last half-dozen years and new federal tax cuts passed in July, which matter because Iowa automatically adopts most federal tax provisions. All told, Iowa faces fiscal challenges not only from state tax cuts, but from other sources, including growing costs for pet projects like private-school vouchers, a new slew of tax cuts and Medicaid and SNAP responsibilities courtesy of this summer’s federal reconciliation bill and a slowing economy. Read on for a refresher on how we got here, new threats ahead — and a plan for getting out.