Iowa tax receipts down for now

Blame it on the calendar.

April 30 is Iowa’s most significant tax due date with individual income taxes, corporate income, sales and use, and fuel taxes all due on that day.

So when April 30 fell on a Saturday and the deadline for paying those taxes was pushed into May, tax collections were significantly affected. Tax collections dropped 1.2 percent compared to April 2021. However, Jeff Robinson, a senior fiscal legislative analyst, explained the situation will be reversed in May.

Net tax collections dropped $11.6 million to $978.4 million for the month, a 1.2 percent decrease, Robinson said.

The monthly numbers as well as year-over-year comparisons are affected by an accounting change started in November 2021, Robinson said.

Over the past 12 months, Iowa net tax revenue has increased $750.3 million, or 7.6 percent. That comes despite what Robinson called a low level of economic activity that occurred during the early months of the COVID-19 pandemic. Tax collections were helped by a recent surge in consumer spending due in part to pent-up demand and federal stimulus payments.

Iowa’s total net revenue for the 12-month period ending April 30 was nearly $10.7 billion. That included an increase of $254.6 million (6 percent) in individual income taxes. Despite the pandemic and a significant decrease in the number of employed Iowans, individual income tax net growth has averaged 3.9 percent over the past three years.

Sales tax revenue increased $322.3 million or 9.7 percent. Gross tax receipts from the sale of vehicles, which is deposited to the Road Use Tax Fund, grew $55.2 million, or 12.6 percent. Vehicle sales have more than recovered from the COVID-19-related slump experienced during summer 2020, Robinson reported.

Robinson attributed the $348 million (10.2 percent) increase in sales and use tax revenue deposited to the state general fund to recent spending fueled by pent-up demand, federal stimulus payments and a shift away from the purchase of services that are not subject to the sales tax.

According to Department of Revenue monthly fuel sales reports, the total gallons subject to fuel tax increased 10.2 percent over the most recent 12-month period.

Gambling revenue increased $86.3 million in that time period, or 29.7 percent. That follows a significant decrease in casino gambling during 2020, when Iowa’s 19 state-regulated casino/racetrack locations closed from mid-March to June because of the pandemic. In contrast, Robinson said, gambling activity over the most recent 12 months has experienced a large increase when compared to an average year.

Corporate income tax decreased $36.4 million (4.4 percent) due to a drop in gross deposits of $12.4 million and a $24 million increase in refunds. That was the first negative growth reading for annual corporate income tax since 2017.

Iowa corporate income tax rates were reduced at the beginning of 2021, and tax returns for tax year 2021 currently are being filed and processed.

Comments: (319) 398-8375; james.lynch@thegazette.com