Iowa’s gross state product has increased 6.5% to $254 billion in the past year, according to the Iowa Business Council’s 2025 Competitive Dashboard report.

The new numbers continue an ongoing trend in gross state product growth:

• $238.3 billion in 2023
• $216.9 billion in 2022
• $194 billion in 2021
• $190 billion in 2020

This is the 14th year the Iowa Business Council has published its nonpartisan Competitive Dashboard report, which measures how the state competes nationally, relative to other states. It also identifies Iowa’s strengths and challenges in maintaining a competitive business environment.

The Competitive Dashboard measures the state’s performance on five indicators, including economic growth, workforce and education, governance, health and wellness, and state demographics.

To remain competitive as a state, Iowa needs to expand its workforce, maintain strong tax policies, increase access to rural health care and advocate for balanced immigration reform, the report stated.

“Our members work together to identify opportunities that will strengthen Iowa’s economy and initiate change in the pursuit of prosperity for the state and its citizens. One way we identify where we need to focus the council’s efforts is through this report, Iowa’s Competitive Dashboard,” said Joe Murphy, the nonpartisan council’s president. “Our members work together to identify opportunities that will strengthen Iowa’s economy and initiate change in the pursuit of prosperity for the state and its citizens.”

Given the state of the economy during the past year, the growth in gross state product is a sign of the state’s industry resilience, he said.

“That’s not surprising to us, as we are working with business leaders every single day. But when you think about the uncertainty that our nation has experienced over the last 12 or 18 months, that’s obviously something that would not have been surprising if some of that dropped off, but the fact that it didn’t, I think, is a good indication of Iowa’s resiliency, and we’re obviously very pleased with that,” Murphy said.

Gage Kent, chairman and CEO of Muscatine-based Kent Corp., and chair of the IBC, delivered the Competitive Dashboard presentation with Murphy. Kent said many of the IBC members have expected a downturn in the economy for a few years, but that downturn has not materialized.

“This year, we’re seeing a little softer situation, primarily due to interest rate issues, I think,” Kent said. “But our businesses have maintained pretty good strength, and our state’s pretty good at maintaining pretty good strength.”

While the agriculture industry is facing difficult challenges, the state’s diverse industry portfolio, from financial services to manufacturing, has helped buoy the state’s economy, Murphy said.

Competitive standings

Iowa’s ranking in various categories, in comparison with other states, includes:

• America’s Top States for Business: 14th
• Corporate tax climate: 23rd
• Gross state product: 31st
• Individual income tax index: 19th
• Labor force participation rate: ninth at 66.3%
• Manufacturing value as a percentage of GSP: third at 17.2%
• Median household income: 33rd
• Property taxes: 32nd
• Unemployment insurance taxes: 33rd

Recommendations

Public policy changes and investments in areas such as education are ways the business community can help improve state rankings, Murphy said.

“The IBC believes we can positively impact all of the categories outlined in this Competitive Dashboard report by focusing on issues such as competitive tax policy, workforce initiatives, health care policy and economic development initiatives,” he said.

The report outlined several recommended actions to improve the state’s rankings and competitiveness:

• Increase available, affordable housing stock.
• Use the Major Economic Growth Attraction Program to recruit businesses to Iowa.
• Work with schools to address future workforce needs.
• Improve the tax system.Increase access to rural health care.
• Increase the number of mental health professionals practicing in Iowa.
• Accelerate population growth.
• Modernize the immigration system.

Here’s a more detailed look at the top issues in the report:

Governance

Tax reform is an area that can make the state more competitive, Murphy said.

In 2022, the Iowa Legislature approved and Gov. Kim Reynolds signed into law income tax cuts that would simplify the state’s income tax brackets from nine to one and institute a flat 3.9% rate by 2026, a drop from the previous maximum rate of 8.9%. This year, the Legislature and business groups are focused on changes to the state’s unemployment and property taxes.

“When we think about competitive tax policy, the IBC applauds recent efforts to expand Iowa’s competitiveness with respect to taxes. This session, we are especially engaged in efforts to reduce unemployment insurance taxes for Iowa’s businesses, which will result in approximately $975 million over five years in savings for businesses. That savings can then be reinvested back into the workforce and innovations of our member companies. We’re also actively engaging in the property tax discussion. Reforming these two areas of tax policy will help Iowa increase its holistic tax system and benefit Iowa citizens and businesses.”

The tax changes passed in 2022 will help create business expansion and population retention, according to the Competitive Dashboard report.

“We’ll continue to make steady progress in making Iowa’s tax code more competitive for individuals and companies, and we are very close to reaching the top tier in competitiveness for the first time in the history of our dashboard,” Kent said. “Since income tax reform was signed into law in 2022, Iowa’s individual tax climate has increased a total of 21 spots, and our corporate tax rate climate has increased 11 total spots. Achieving a top 15 rank in individual and corporate favorable tax climate is a long-term goal of the Iowa Business Council.”

Economic growth

One of the wins listed in the report is the increase in Iowa’s median household income, which went from $69,588 in 2023 to $71,433 in 2024.

One of the challenges in the report is the state’s declining labor participation. The report uses data from each November to maintain consistency in tracking the data point. In November 2024, the participation rate was 66.3%, down from 67.4% in November 2023. IBC leaders would like to see that number improve to at least 68%, the report stated.

“Available workforce continues to be a significant concern for the Iowa Business Council,” Kent said. “While Iowa maintains a top 10 position in labor force participation, you will note that we have declined for the last year’s report.”

Before the pandemic, the participation rate was 70%. Murphy said the IBC does not yet have data to explain the decline, but he has a couple of theories: an increase in retirements since 2020 and a lack of engagement of young men in the workforce, which mirrors a national trend. Since the pandemic, Iowa’s labor force has declined by 10,000 people.

“It used to be in Iowa that its aging population would work well beyond retirement age; I think COVID made people rethink that,” he said.

A Pew Research Center study outlined labor market trends illustrating the drop-off in male labor force engagement. The study showed that in 1970, 98% of young men in the U.S. had earned a high school diploma and were employed. Today, that figure is 87%.

Education and workforce

A decline in reading and math test scores among Iowa students is a concern for many in the business community, the report stated. In 2024, 29% of Iowa students had a fourth grade reading proficiency, putting Iowa at 32nd in the country. A year earlier, 33% of Iowa students achieved that proficiency, putting the state at 17th nationally. Many states are experiencing a similar decline, according to the report.

When it comes to math, 27% of students had eighth grade proficiency, ranking Iowa at 24th nationally, compared with 28% the year before, when Iowa ranked 16th.

“While this is a national trend, the results are concerning for Iowa, and we are thankful the governor and the Legislature are looking into ways in which public policy can play a role in increasing competitiveness and competencies in these areas,” Kent said.

IBC is prioritizing work-based learning opportunities for students, including apprenticeships and internships. During the 2023-2024 academic year, 295 Iowa high school districts offered this type of work-based learning, resulting in 24,827 Iowa students participating.

“The IBC will continue to advocate for initiatives that grow Iowa’s workforce, including work-based learning opportunities, child care initiatives, housing and mental health initiatives,” Murphy said.

State demographics

Iowa must increase its population to create business growth and expansion, IBC leaders said. The state ranks 31st in total population. Its five-year population change is 1.7%, for a rank of 29th in the country, up one spot from last year.

“As we’ve said for years, Iowa’s population needs to grow in order for business to expand and provide opportunities for the next generation of Iowans,” Kent said. “Growing our population is an absolute must. The IBC continues to be a strong advocate for comprehensive immigration reform at the federal level, while also partnering with state and local organizations on marketing opportunities for Iowa’s careers and business opportunities.”

Health and wellness

The report also addressed the lack of access to health care in rural Iowa, including a shortage of mental health providers. Iowa ranks 32nd for the number of primary care providers available per 100,000 people, which is a decline of six ranking spots from the previous year.

“As the report notes, Iowa’s health care delivery system, like the rest of the country, continues to experience stress in meeting the health needs of Iowans. While there are multiple issues that need attention, focusing on increasing the number of primary care providers should be at the top of the list,” Kent said. “That’s why we’re proud to support recently introduced rural health care legislation that will more than double various loan repayment programs for high-demand medical professionals, increase graduate medical opportunities for Iowa, so Iowa can educate and ultimately retain more doctors and increase access to rural health care in Iowa.”

IBC plans to visit several communities via its Vision to Vitality forums to share the findings and gather real-time feedback about community challenges.

“We invite you or anyone else to participate in these events,” Murphy said. “These forums help us bridge differences with local policy makers, engage with local educators and business leaders to better position our state to grow and enhance our economy.”

IBC members include companies such as Principal Financial Group, Vermeer, Collins Aerospace, Casey’s General Stores, Hy-Vee and more. In 2024, these companies employed more than 150,000 Iowans, had a combined payroll of $8.5 billion, spent over $2.8 billion in capital investments, spent about $2 billion on research and development, gave over $115 million in charitable contributions, accumulated more than 300,000 volunteer hours of paid time off for employees and spent $30 million on education and training, Murphy said.

“Iowa’s competitive dashboard is far more than a collection of data and statistics about our state. It’s meant to serve as a tool for business and community leaders to determine how they can strengthen our state, whether that be joining us in implementing our recommendations or developing their own solutions based on this data,” Kent said.