Iowa’s overall tax revenue increased 4 percent in the past 12 months compared to 1.6 percent growth the previous year, the Legislative Services Agency reported Friday.
The $329.9 million growth was concentrated in individual income taxes and sales taxes, the agency said, while taxes on fuel and tobacco and the franchise tax paid by financial institutions declined over that period.
Net tax revenue for June was $788.7 million, an increase of $44 million or 5.9 percent compared to June 2017, according to the report.
Net revenue from all taxes for the 12 months ending June 30 totaled $8.588 billion.
Individual income tax revenue increased $276 million, or 7.7 percent, fueled largely by changes in federal income taxes, the Legislative Services Agency said.
The reduction in federal income tax rates resulted in an automatic increase in Iowa withholding tax receipts. That’s because the Iowa tax code allows taxpayers to deduct what they pay for federal taxes from their Iowa taxable income.
Iowa lawmakers agreed this year to phase out federal deductibility to prevent that happening again, but in the meantime, the one-time windfall spurred the state’s revenue growth.
Iowa corporate income tax receipts grew $28 million, or 7 percent, after being generally down year-over-year from October 2015 through May 2017, the report said.
Sales and use taxes were up $105.4 million overall, or 3.9 percent, with taxes on vehicle sales, which is deposited in the Road Use Tax Fund, increasing $15.2 million or 4 percent.
Sales/use tax revenue deposited to other state funds, mainly the Flood Mitigation Fund, decreased $6.7 million.
Sales tax revenue deposited to the state general fund increased 4.6 percent, or $129.1 million, while refunds of state general fund sales/use tax payments increased $41.1 million.
Sales tax payments to the school infrastructure account — recorded as tax refunds — decreased $8.8 million.
The Legislative Service Agency also reported a $3 million, or 1 percent, increase in gambling tax revenue.
According to the Iowa Racing and Gaming Commission, 10 of Iowa’s 19 state-regulated casino/track locations recorded negative annual adjusted gross revenue growth for the 12 months ending June 30.
The combined change for all of the 19 facilities, though, grew 0.7 percent over the previous 12 months. The adjusted gross revenue growth for all the gambling facilitiies was $1.464 billion for the fiscal year, or 0.4 percent below the annual revenue growth peak in November 2012.
Fuel tax revenue fell 9.3 percent, $66.8 million, due to sales of taxable fuels falling 0.3 percent, the report said. Sales of gasoline blended with ethanol fell 1.131 billion gallons, or 3.4 percent, while sales of unblended gasoline, diesel and diesel blends, and aviation fuel increased.
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Insurance premium and real estate transfer tax revenue increased, but tobacco tax revenue fell 3.9 percent, or $8.6 million.
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