Iowa

Iowa

Budget Links

FY2026 (enacted)
FY2026 (proposed)
FY2025 (enacted)
FY2024 (enacted)
FY2023 (enacted)
FY2022 (enacted)
FY2021 (enacted)

Enacted Budget – Fiscal Year 2026

On June 11, Iowa Governor Kim Reynolds finished acting on the various bills that comprise the fiscal 2026 budget. General fund appropriations total $9.42 billion in fiscal 2026, an increase of $478.9 million, or 5.4 percent, compared to fiscal 2025. General fund net receipts are estimated at $8.51 billion in fiscal 2026, a decrease of $626.7 million, or 6.9 percent, compared to fiscal 2025. The projected decline in revenue for fiscal 2026 is partly driven by previously approved tax cuts. The enacted budget includes a surplus carryforward of $2.08 billion and a transfer from the Taxpayer Relief Fund of $463.6 million, resulting in an ending balance/surplus of $1.61 billion. Additionally, the balance of the Cash Reserve Fund is estimated at $636.9 million at the end of fiscal 2026.

The enacted budget is focused on putting taxpayers first and keeping Iowa on a strong, fiscally sustainable path. During the legislative session, the governor signed unemployment insurance reform that reduces the taxable wage base by half, lowers the maximum tax rate, and simplifies the unemployment tax system. The governor also signed legislation focused on rural healthcare including attracting more physicians to the state and enhancing access to healthcare in rural Iowa by increasing investments. Other legislation signed by the governor included a disaster assistance package in response to 2024 storms; new cancer research funding; paid maternity and paternity leave for state employees; Medicaid work requirements; the sunset of an existing economic development incentive program and the launch of new business incentives; the appropriation of Opioid Settlement funds to help address the opioid crisis; and a series of bills aimed at improving educational performance and reducing distractions in the classroom.  

Enacted Budget Information
Fiscal Year 2026 Enacted Budget 

End of Session Information 

Legislative Fiscal Analysis

Governor’s Press Release

Proposed Budget - Fiscal Year 2026

Iowa Governor Kim Reynolds released her fiscal 2026 budget proposal on January 14. The budget calls for $9.43 billion in total general fund appropriations, an increase of 5.4 percent from fiscal 2025’s revised level. The largest program areas include education (56 percent), health and human services (28 percent), and justice/judicial branch (9 percent). Fiscal 2026 total tax receipts are estimated at $10.22 billion, a 6.0 percent decrease from fiscal 2025’s estimated level. The decline in revenue is largely due to recently enacted tax cuts, including a new flat income tax rate that began on January 1. The budget assumes total reserve funds of $872.5 million, including a cash reserve fund of $654.4 million and an economic emergency fund of $218.1 million. In addition, the fiscal 2026 ending balance of the Taxpayer Relief Fund is estimated at $3.65 billion. 

Proposed Budget Highlights 

The governor said that over a few short years, Iowa has been able to cut taxes, shrink and align government, and turn the state into a national model for bold, get-it-done government. The governor added the recent change to a flat state income tax rate will be sustainable in the long-term due to efforts to cut government and change the way it interacts. The governor’s vision moving forward includes rebuilding communities; creating a student-focused education from PreK-12; building a strong, competitive Iowa; building on an affordable, reliable, and sustainable energy system; ensuring excellent healthcare for all Iowans; saving Iowans money; and creating a solid foundation for Iowa families. Highlights of her proposals include:

Rebuilding Communities

• Adding to the Nuisance Property and Abandoned Building Fund
• Extending tax exclusion to disaster assistance for housing developers
• Adjusting insurance regulations to better protect consumers and homeowners
• Modifying emergency funds transfer authority in times of disasters
• Setting up the new Safeguarding Tomorrow Revolving Loan Fund
• Fully funding disaster aid programs established in response to 2024 storms

Student Focused from PreK-12

• Restricting personal electronic devices during instructional time
• Addressing crucial gaps in math and civics education
• Creating a pathway for a continuum of all-day care for four-year-olds
• Strengthening the childcare workforce
• Facilitating parental choice beginning in preschool
• Improving the quality of preschool standards
• Making technical improvements based on feedback from superintendents 

Building a Strong, Competitive Iowa

• Removing the requirement for a paraeducator certificate
• Adjusting restrictions related to the teacher intern pathway
• Applying for a federal waiver to institute work requirements for able-bodied adults on Medicaid
• Reforming Unemployment Insurance including through decreasing the taxable wage base by half; lowering the maximum tax rate to 5.4 percent; reducing the number of tax tables; and encouraging businesses to reinvest savings into their employees

Building an Affordable, Reliable and Sustainable Energy System

• Creating a Nuclear Energy Task Force via executive order
• Establishing a partnership between the Iowa Utilities Commission (IUC) and Iowa State University (ISU) to conduct transparent, independent load forecasting and energy assessments
• Giving clear authority to the Iowa Department of Natural Resources to permit on-farm and near-farm anaerobic digesters
• Granting the incumbent utility the Right of First Refusal (ROFR) on new electronic transmission line infrastructure projects
• Modernizing the existing Energy Infrastructure Revolving Loan Program
• Reallocating existing federal tax-exempt bond capacity for energy and water infrastructure

Ensuring Excellent Care for All Iowans

• Investing into new unbundled Medicaid maternal rates
• Working with CMS to implement a funding model to provide more Medicaid rate flexibility
• Consolidating and more than doubling funding for student loan repayment programs
• Establishing a Medicaid Graduate Medical Education (GME) enhanced payment
• Streamlining the approval process to build new healthcare facilities or enhance current ones
• Improving the Health Information Exchange network by authorizing HHS to competitively procure and manage it

Saving Iowans Money 

• Issuing an executive order to create an Iowa Department of Government Efficiency (DOGE) task force
• Recommends the demolition of the Wallace State Office Building and adjacent parking garage 

A Solid Foundation for Iowa

• Proposes four weeks of paid leave for state employees who give birth; one week of paid leave for state employees who did not give birth; and four weeks of paid leave for state employees who adopt a child

Proposed Budget Information
Fiscal Year 2026 Budget Proposal 

Vision for Iowa

Budget In Brief

Revenue Forecast (December 2024)