|Another Strong Revenue Month for Iowa
State revenue collections continued at a strong pace in February, according to the Legislative Services Agency. Tax collections for February were 5.7 percent higher than February 2022, with an additional $35.7 million being paid to the state. This increase includes January’s implementation of the 2022 tax reform law. For the first eight moths of the fiscal year, state revenue has grown by 4 percent. This is well ahead of the 1.9 percent reduction forecasted by the Revenue Estimating Conference.
Personal income tax payments to the state were down compared to February of last year, but a decline would be expected with the tax cut going into effect. The 2022 law was projected to lower Iowans tax liability by $50 million in February. So the fact that actual personal income tax payments only fell by $18.3 million shows that Iowa’s economy is still performing well. For the year, personal income tax payments are up 4.7 percent over FY 2022. This is well ahead of the REC’s forecast of a decline of 3.5 percent.
Sales tax collections for the month were down by $84.2 million, with the cause being change in sales tax deposit dates that began at the start of Fiscal Year 2023. Most sales tax payments from retailers now happen at the end of each month, with some collections not being credited in the state’s accounting system until the start of the next month.
February is always a slow month for corporate income tax payments, and this February was no different. The state collected $10 million in corporate income tax, which is a decline of $4.1 million. As with personal income tax, corporate income tax rates were reduced on January 1, so payments are likely to not meet last year’s high levels.
The continuing strong revenue picture should have an impact on the next meeting of the Revenue Estimating Conference. The forecasting group will meet on Friday, at 11 am to revise their projections for Fiscal Years 2023 and 2024 and will make an initial forecast for state revenue in Fiscal Year 2025. The meeting will be in the Supreme Court chamber and can be viewed on the Legislative Services Agency’s YouTube page: