Amends, repeals, and adds to existing law to revise provisions regarding the rate of income taxes.

LEGISLATURE OF THE STATE OF IDAHO Sixty-eighth Legislature Second Regular Session - 2026 IN THE HOUSE OF REPRESENTATIVES HOUSE BILL NO. 589 BY BERCH AN ACT1 RELATING TO TAXATION; AMENDING SECTION 63-3024, IDAHO CODE, TO REVISE PROVI-2 SIONS REGARDING THE IDAHO INCOME TAX RATE ON INDIVIDUALS, ESTATES, AND3 TRUSTS; REPEALING SECTION 63-3024, IDAHO CODE, RELATING TO THE IDAHO4 INCOME TAX RATE ON INDIVIDUALS, ESTATES, AND TRUSTS; AMENDING CHAPTER5 30, TITLE 63, IDAHO CODE, BY THE ADDITION OF A NEW SECTION 63-3024,6 IDAHO CODE, TO ESTABLISH PROVISIONS REGARDING THE IDAHO INCOME TAX RATE7 ON INDIVIDUALS, ESTATES, AND TRUSTS; AMENDING SECTION 63-3025, IDAHO8 CODE, TO REVISE PROVISIONS REGARDING THE IDAHO INCOME TAX RATE ON CORPO-9 RATIONS; REPEALING SECTION 63-3025, IDAHO CODE, RELATING TO THE IDAHO10 INCOME TAX RATE ON CORPORATIONS; AMENDING CHAPTER 30, TITLE 63, IDAHO11 CODE, BY THE ADDITION OF A NEW SECTION 63-3025, IDAHO CODE, TO ESTABLISH12 PROVISIONS REGARDING THE IDAHO INCOME TAX RATE ON CORPORATIONS; AND13 PROVIDING EFFECTIVE DATES.14

Be It Enacted by the Legislature of the State of Idaho:15

SECTION 1. That Section 63-3024, Idaho Code, be, and the same is hereby16 amended to read as follows:17 63-3024. INDIVIDUALS' TAX AND TAX ON ESTATES AND TRUSTS. (1) For each18 taxable year, a tax measured by Idaho taxable income as defined in this chap-19 ter is hereby imposed upon every individual, trust, or estate required by20 this chapter to file a return.21 (2)(a) The tax imposed upon individuals, trusts, and estates shall be22 computed at the rate of five and three-tenths percent (5.3%) five and23 six hundred ninety-five thousandths percent (5.695%) of taxable income24 over two thousand five hundred dollars ($2,500).25 (b) For taxpayers filing a joint return pursuant to the provisions26 of section 63-3031, Idaho Code, the tax imposed shall be computed at27 the rate of five and three-tenths percent (5.3%) five and six hundred28 ninety-five thousandths percent (5.695%) of taxable income over five29 thousand dollars ($5,000). For the purposes of this section, a return30 of a surviving spouse, as defined in section 2(a) of the Internal Rev-31 enue Code, and a head of household, as defined in section 2(b) of the32 Internal Revenue Code, shall be treated as a joint return.33 (3) For taxable year 2000 and each year thereafter, the state tax com-34 mission shall prescribe a factor that shall be used to compute the Idaho in-35 come tax thresholds provided in subsection (2) of this section. The factor36 shall provide an adjustment to the Idaho tax thresholds so that inflation37 will not result in a tax increase. The Idaho tax thresholds shall be adjusted38 as follows: multiply the last threshold amount by the percentage (the con-39 sumer price index for the calendar year immediately preceding the calendar40 year to which the adjusted threshold amount will apply divided by the con-41 sumer price index for calendar year 1998). For the purpose of this computa-42

2 tion, the consumer price index for any calendar year is the average of the1 consumer price index as of the close of the twelve (12) month period for the2 immediately preceding calendar year, without regard to any subsequent ad-3 justments, as adopted by the state tax commission. This adoption shall be4 exempt from the provisions of chapter 52, title 67, Idaho Code. The consumer5 price index shall mean the consumer price index for all U.S. urban consumers6 published by the United States department of labor. The state tax commission7 shall annually include the factor as provided in this subsection to multiply8 against Idaho taxable income using the thresholds in this section to arrive9 at that year's Idaho taxable income for tax threshold purposes.10 (4) In the case of a trust that is an electing small business trust as11 defined in section 1361 of the Internal Revenue Code, the special rules for12 taxation of such trusts contained in section 641 of the Internal Revenue Code13 shall apply, except that the individual rate provided in subsection (2)(a)14 of this section shall apply in computing tax due under this chapter.15 (5) The state tax commission may promulgate rules defining the condi-16 tions upon which such returns shall be filed.17

SECTION 2. That Section 63-3024, Idaho Code, be, and the same is hereby18 repealed.19

SECTION 3. That Chapter 30, Title 63, Idaho Code, be, and the same is20 hereby amended by the addition thereto of a NEW SECTION, to be known and des-21 ignated as Section 63-3024, Idaho Code, and to read as follows:22 63-3024. INDIVIDUALS' TAX AND TAX ON ESTATES AND TRUSTS. (1) For each23 taxable year, a tax measured by Idaho taxable income as defined in this chap-24 ter is hereby imposed on every individual, trust, or estate required by this25 chapter to file a return.26 (2)(a) The tax imposed on individuals, trusts, and estates shall be27 computed at the rate of five and three-tenths percent (5.3%) of taxable28 income over two thousand five hundred dollars ($2,500).29 (b) For taxpayers filing a joint return pursuant to the provisions of30 section 63-3031, Idaho Code, the tax imposed shall be computed at the31 rate of five and three-tenths percent (5.3%) of taxable income over five32 thousand dollars ($5,000). For the purposes of this section, a return33 of a surviving spouse, as defined in section 2(a) of the Internal Rev-34 enue Code, and a head of household, as defined in section 2(b) of the In-35 ternal Revenue Code, shall be treated as a joint return.36 (3) For taxable year 2000 and each year thereafter, the state tax com-37 mission shall prescribe a factor that shall be used to compute the Idaho in-38 come tax thresholds provided in subsection (2) of this section. The factor39 shall provide an adjustment to the Idaho tax thresholds so that inflation40 will not result in a tax increase. The Idaho tax thresholds shall be adjusted41 as follows: multiply the last threshold amount by the percentage (the con-42 sumer price index for the calendar year immediately preceding the calendar43 year to which the adjusted threshold amount will apply divided by the con-44 sumer price index for calendar year 1998). For the purpose of this computa-45 tion, the consumer price index for any calendar year is the average of the46 consumer price index as of the close of the twelve (12) month period for the47 immediately preceding calendar year, without regard to any subsequent ad-48

3 justments, as adopted by the state tax commission. This adoption shall be1 exempt from the provisions of chapter 52, title 67, Idaho Code. The consumer2 price index shall mean the consumer price index for all U.S. urban consumers3 published by the United States department of labor. The state tax commission4 shall annually include the factor as provided in this subsection to multiply5 against Idaho taxable income using the thresholds in this section to arrive6 at that year's Idaho taxable income for tax threshold purposes.7 (4) In the case of a trust that is an electing small business trust as8 defined in section 1361 of the Internal Revenue Code, the special rules for9 taxation of such trusts contained in section 641 of the Internal Revenue Code10 shall apply, except that the individual rate provided in subsection (2)(a)11 of this section shall apply in computing tax due under this chapter.12 (5) The state tax commission may promulgate rules defining the condi-13 tions upon which such returns shall be filed.14

SECTION 4. That Section 63-3025, Idaho Code, be, and the same is hereby15 amended to read as follows:16 63-3025. TAX ON CORPORATE INCOME. (1) For each taxable year, a tax is17 hereby imposed on the Idaho taxable income of a corporation, other than an18 S corporation, that transacts or is authorized to transact business in this19 state or has income attributable to this state. The tax rate imposed by this20 section shall be as follows:21 (a) For each taxable year, commencing on and after January 1, 2001, the22 tax imposed by this section shall be equal to seven and six-tenths per-23 cent (7.6%) of Idaho taxable income.24 (b) For each taxable year, commencing on and after January 1, 2012, the25 tax imposed by this section is changed and shall be equal to seven and26 four-tenths percent (7.4%) of Idaho taxable income.27 (c) For each taxable year, commencing on and after January 1, 2018, the28 tax imposed by this section is changed and shall be equal to six and nine29 hundred twenty-five thousandths percent (6.925%) of Idaho taxable in-30 come.31 (d) For each taxable year, commencing on and after January 1, 2021,32 the tax imposed by this section is changed and shall be equal to six and33 five-tenths percent (6.5%) of Idaho taxable income.34 (e) For each taxable year, commencing on and after January 1, 2022, the35 tax imposed by this section is changed and shall be equal to six percent36 (6%) of Idaho taxable income.37 (f) For each taxable year, commencing on and after January 1, 2023, the38 tax imposed by this section is changed and shall be equal to five and39 eight-tenths percent (5.8%) of Idaho taxable income.40 (g) For each taxable year, commencing on and after January 1, 2024, the41 tax imposed by this section is changed and shall be equal to five and six42 hundred ninety-five thousandths percent (5.695%) of Idaho taxable in-43 come.44 (h) For each taxable year, commencing on and after January 1, 2025, the45 tax imposed by this section is changed and shall be equal to five and46 three-tenths percent (5.3%) of Idaho taxable income.47

4 (2) In the case of an S corporation that is required to file a return un-1 der section 63-3030, Idaho Code, a tax is hereby imposed at the rate provided2 in subsection (1) of this section upon both:3 (a) Net recognized built-in gain attributable to this state. The4 amount of net recognized built-in gain attributable to this state shall5 be computed in accordance with section 1374 of the Internal Revenue6 Code subject to the apportionment and allocation provisions of section7 63-3027, Idaho Code; and8 (b) Excess net passive income attributable to this state. The amount of9 excess net passive income attributable to this state shall be computed10 in accordance with section 1375 of the Internal Revenue Code subject to11 the apportionment and allocation provisions of section 63-3027, Idaho12 Code.13 (3) The tax imposed by subsection (1) or (2) of this section shall not be14 less than twenty dollars ($20.00); provided that the twenty-dollar ($20.00)15 minimum payment shall not be collected from nonproductive mining corpora-16 tions.17 (4) The tax imposed by this section shall not apply to corporations18 taxed pursuant to the provisions of section 63-3025A, Idaho Code.19

SECTION 5. That Section 63-3025, Idaho Code, be, and the same is hereby20 repealed.21

SECTION 6. That Chapter 30, Title 63, Idaho Code, be, and the same is22 hereby amended by the addition thereto of a NEW SECTION, to be known and des-23 ignated as Section 63-3025, Idaho Code, and to read as follows:24 63-3025. TAX ON CORPORATE INCOME. (1) For each taxable year, a tax is25 hereby imposed on the Idaho taxable income of a corporation, other than an26 S corporation, that transacts or is authorized to transact business in this27 state or has income attributable to this state. The tax rate imposed by this28 section shall be as follows:29 (a) For each taxable year, commencing on and after January 1, 2001, the30 tax imposed by this section shall be equal to seven and six-tenths per-31 cent (7.6%) of Idaho taxable income.32 (b) For each taxable year, commencing on and after January 1, 2012, the33 tax imposed by this section is changed and shall be equal to seven and34 four-tenths percent (7.4%) of Idaho taxable income.35 (c) For each taxable year, commencing on and after January 1, 2018, the36 tax imposed by this section is changed and shall be equal to six and nine37 hundred twenty-five thousandths percent (6.925%) of Idaho taxable in-38 come.39 (d) For each taxable year, commencing on and after January 1, 2021,40 the tax imposed by this section is changed and shall be equal to six and41 five-tenths percent (6.5%) of Idaho taxable income.42 (e) For each taxable year, commencing on and after January 1, 2022, the43 tax imposed by this section is changed and shall be equal to six percent44 (6%) of Idaho taxable income.45 (f) For each taxable year, commencing on and after January 1, 2023, the46 tax imposed by this section is changed and shall be equal to five and47 eight-tenths percent (5.8%) of Idaho taxable income.48

5 (g) For each taxable year, commencing on and after January 1, 2024, the1 tax imposed by this section is changed and shall be equal to five and six2 hundred ninety-five thousandths percent (5.695%) of Idaho taxable in-3 come.4 (h) For each taxable year, commencing on and after January 1, 2025, the5 tax imposed by this section is changed and shall be equal to five and6 three-tenths percent (5.3%) of Idaho taxable income.7 (i) For each taxable year, commencing on and after January 1, 2027, the8 tax imposed by this section is changed and shall be equal to five and six9 hundred ninety-five thousandths percent (5.695%) of Idaho taxable in-10 come.11 (j) For each taxable year, commencing on and after January 1, 2028, the12 tax imposed by this section is changed and shall be equal to five and13 three-tenths percent (5.3%) of Idaho taxable income.14 (2) In the case of an S corporation that is required to file a return un-15 der section 63-3030, Idaho Code, a tax is hereby imposed at the rate provided16 in subsection (1) of this section on both:17 (a) Net recognized built-in gain attributable to this state. The18 amount of net recognized built-in gain attributable to this state shall19 be computed in accordance with section 1374 of the Internal Revenue20 Code subject to the apportionment and allocation provisions of section21 63-3027, Idaho Code; and22 (b) Excess net passive income attributable to this state. The amount of23 excess net passive income attributable to this state shall be computed24 in accordance with section 1375 of the Internal Revenue Code subject to25 the apportionment and allocation provisions of section 63-3027, Idaho26 Code.27 (3) The tax imposed by subsection (1) or (2) of this section shall not be28 less than twenty dollars ($20.00); provided that the twenty-dollar ($20.00)29 minimum payment shall not be collected from nonproductive mining corpora-30 tions.31 (4) The tax imposed by this section shall not apply to corporations32 taxed pursuant to the provisions of section 63-3025A, Idaho Code.33

SECTION 7. Sections 1 and 4 of this act shall be in full force on and af-34 ter January 1, 2027, and Sections 2, 3, 5, and 6 of this act shall be in full35 force and effect on and after January 1, 2028.36