Idaho House votes on bill to use $600 million on income tax relief. Here’s what happened

Darin Oswald/
·4 min read

The Idaho House on Wednesday quickly passed a bill that would provide $600 million worth of income tax cuts, the first legislation proposed in this year’s session.

On Thursday, the House voted, 57-13, to pass the bill, proposed by Republican Gov. Brad Little. The $250 million in ongoing tax cuts and $350 million in one-time rebates — $94 million of which is offset by the state’s tax relief fund — represents about a quarter of the state’s anticipated $1.9 billion surplus.

The bill nearly passed along party lines. Rep. Fred Wood, R-Burley, joined the dozen House Democrats in voting against it.

House Bill 436 would reduce the top individual income tax bracket and corporate tax rate from 6.5% to 6%. It also provides $350 billion in rebates, which cover either 12% of someone’s 2020 income taxes or $75 per taxpayer and dependent, whichever is greater.

Republicans said it’s the largest tax relief bill in state history.

“Usually a big bill drags on through the session, lots of commotion, lots of frustration, and then gets jammed through the last week,” said co-sponsor Rep. Steven Harris, R-Meridian. “We worked hard to avoid this this time.”

A family of two adult workers with two children that makes $110,000 per year would see a tax cut of about $988, or $582 from the rebate and $384 from the ongoing cut in the individual income tax rate. A family of four with a $50,000 income would see an $80 ongoing tax cut on top of a $300 rebate.

The bill would also reduce the tax rate for the second-lowest tax bracket — those whose taxable income is between $1,000 and $3,000 — from 3.1% to 3% and it reduces the number of tax brackets.

Democrats want tax relief on groceries, property taxes

House Bill 436 would provide rebates dependent on earnings. The more taxable income an Idaho resident had in 2020, the larger the rebate.

House Majority Leader Mike Moyle, R-Star, who co-sponsored the bill, framed the rebates as necessary relief when inflation and supply chain issues are impacting Idaho consumers. Moyle said $75 is “a lot of money to a lot of people.”

“The sooner we pass this, the sooner we can start sending the money out,” he said.

Democrats called the tax relief “lopsided.” Idahoans with $1 million in annual taxable income will receive an ongoing yearly tax cut of over $5,000 and nearly $8,000 in a one-time rebate, Democrats said in a Thursday news release. An Idahoan making less than $26,000 a year will receive a rebate of $75 and a $2 ongoing income tax cut.

“It’s enough money to fill your gas tank and maybe go to dinner,” said Rep. James Ruchti, D-Pocatello, during Thursday’s House debate. “That rebate will be spent within a three-hour period, then it’s gone.”

Rep. Caroline Nilsson Troy, R-Genesee, defended millionaires and said Idaho’s wealthiest are self-made and philanthropic. They will return the rebates to their communities through charity, she said.

“By God, this state has benefited from our millionaires, and I’m thankful for them,” Troy said. “And if this tax break is benefiting our millionaires, I know it’s going to come back to our little communities everywhere in our state, and I’m thankful for that.”

Democrats argued the Legislature should focus on other forms of tax relief, such as repealing the state’s tax on groceries or reducing property taxes.

House Minority Leader Ilana Rubel, D-Boise, said the various modes of tax relief are not mutually exclusive. If the Legislature passes the income tax cut, there won’t be money left to repeal the state’s grocery tax, she said.

During a committee meeting earlier this week, Rep. Tammy Nichols, R-Middleton, agreed with Democrats but said she is hopeful the Legislature can also tackle grocery and property taxes later in the session.

“I’ve had zero people ask me for this type of income tax reduction,” Nichols said. The Middleton Republican ultimately voted in favor of the bill.

The bill now heads to the Senate.

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