Net tax revenue for the State of Iowa dropped almost 24 percent in April compared to the same month last year, but Legislative Services Agency analyst Jeff Robinson says tax changes at the state and federal level caused the blip.
“The 3.8 percent we see in year-to-date revenue is almost entirely the result of tax law changes and the one-time 2012 federal tax issue,” Robinson says, “and is not the result of any noticeable decrease in economic performance.”
For the 2012 tax year, farmers got an extra month to file their income taxes, so most farm returns were filed in April of 2013, plus state lawmakers increased the Earned Income Tax Credit and created a new tax credit. Both of those actions decreased income tax payments to the state in the 2014 tax season. Robinson says state sales tax collections and individual income tax withholding both continue to grow.
“What this means it that while the overall net General Fund revenue level is down compared to last year, it has more to do with the unusual circumstances of last year as opposed to any underlying economic weakness this year,” Robinson says.
Sales and use tax collections were up 4.4 percent in April compared to the same month last year. State income tax withholding was up nearly half a percent, a gain of 14 million dollars for the state treasury.