Amends and adds to existing law to provide certain deductions to income taxes and to provide for an increased food tax credit for seniors.

LEGISLATURE OF THE STATE OF IDAHO Sixty-eighth Legislature Second Regular Session - 2026 IN THE HOUSE OF REPRESENTATIVES HOUSE BILL NO. 605 BY GANNON AN ACT1 RELATING TO TAXATION; AMENDING CHAPTER 30, TITLE 63, IDAHO CODE, BY THE AD-2 DITION OF A NEW SECTION 63-3022W, IDAHO CODE, TO PROVIDE FOR SUBTRAC-3 TIONS TO IDAHO TAXABLE INCOME FOR QUALIFIED TIPS AND OVERTIME COMPENSA-4 TION; AMENDING SECTION 63-3024A, IDAHO CODE, TO REVISE PROVISIONS RE-5 GARDING FOOD TAX CREDITS AND REFUNDS; AMENDING SECTION 63-3077G, IDAHO6 CODE, TO PROVIDE A CORRECT CODE REFERENCE; AMENDING SECTION 63-3077H,7 IDAHO CODE, TO PROVIDE A CORRECT CODE REFERENCE; AND DECLARING AN EMER-8 GENCY AND PROVIDING RETROACTIVE APPLICATION.9

Be It Enacted by the Legislature of the State of Idaho:10

SECTION 1. That Chapter 30, Title 63, Idaho Code, be, and the same is11 hereby amended by the addition thereto of a NEW SECTION, to be known and des-12 ignated as Section 63-3022W, Idaho Code, and to read as follows:13 63-3022W. QUALIFIED TIPS AND OVERTIME COMPENSATION. (1) For taxable14 years beginning on or after January 1, 2026, and before January 1, 2029, in15 computing Idaho taxable income, there shall be subtracted from federal ad-16 justed gross income:17 (a) The amount of qualified tips, as defined in section 224 of the In-18 ternal Revenue Code as added by P.L. 119-21, received by the taxpayer19 during the taxable year, subject to the limitations, phase-outs, and20 other provisions provided in such section; and21 (b) The premium portion of qualified overtime compensation, as defined22 in section 225 of the Internal Revenue Code as added by P.L. 119-21, re-23 ceived by the taxpayer during the taxable year, subject to the limita-24 tions, phase-outs, and other provisions provided in such section.25 (2) The state tax commission may prescribe rules, subject to legisla-26 tive approval, as necessary to implement the provisions of this section.27

SECTION 2. That Section 63-3024A, Idaho Code, be, and the same is hereby28 amended to read as follows:29 63-3024A. FOOD TAX CREDITS AND REFUNDS. (1) Any resident individual30 who is required to file and who has filed an Idaho income tax return shall31 be allowed a credit against taxes due under the Idaho income tax act for the32 taxpayer, the taxpayer's spouse, and each dependent, as defined in section33 152 of the Internal Revenue Code, claimed on the taxpayer's Idaho income tax34 return and awarded by the court under section 32-706, Idaho Code, if appli-35 cable. For tax year 2022, the credit is one hundred dollars ($100). For tax36 years 2023 and 2024, the credit is one hundred twenty dollars ($120). For37 tax year 2025 and each year thereafter, the credit is one hundred fifty-five38 dollars ($155). If taxes due are less than the total credit allowed, the tax-39 payer shall be paid a refund equal to the balance of the unused credit.40

2 (2) A resident individual who is not required to file an Idaho income1 tax return and for whom no credit or refund is allowed under any other subsec-2 tion of this section shall, subject to the limitations of subsections (3),3 (4), (5), (6), and (7), and (8) of this section, be entitled to a refund in the4 amount provided in subsection (1) of this section.5 (3) A resident individual who has reached sixty-five (65) years of age6 before the end of the taxable year and who has claimed the credit available7 under subsection (1) of this section, in addition to the amount of credit or8 refund due under subsection (1) of this section, shall be entitled to fifty9 dollars ($50.00), which shall be claimed as a credit against any taxes due10 under the Idaho income tax act. If taxes due are less than the total credit11 allowed, the individual shall be paid a refund equal to the balance of the12 unused credit.13 (3) (4) Except as provided in subsection (8) (9) of this section, a14 credit or refund under this section is available only if the individual for15 whom a personal exemption is claimed is a resident of the state of Idaho.16 (4) (5) In no event shall more than one (1) taxpayer be allowed a credit17 or refund for the same personal exemption or under more than one (1) subsec-18 tion of this section.19 (5) (6) In the event that a credit or refund is attributable to any indi-20 vidual for whom assistance under the federal food stamp program was received21 for any month or part of a month during the taxable year for which the credit22 or refund is claimed, the credit or refund allowed under this section shall23 be in proportion to the number of months of the year in which no assistance24 was received.25 (6) (7) In the event that a credit or refund is attributable to any indi-26 vidual who has been incarcerated for any month or part of a month during the27 taxable year for which the credit or refund is claimed, the credit or refund28 allowed under this section shall be in proportion to the number of months of29 the year in which the individual was not incarcerated.30 (7) (8) No credit or refund shall be paid that is attributable to an in-31 dividual residing illegally in the United States.32 (8) (9) Any part-year resident entitled to a credit under this section33 shall receive a proportionate credit reflecting the part of the year in which34 he was domiciled in this state.35 (9) (10) In lieu of the flat tax credit amounts provided in subsection36 (1) of this section, a resident taxpayer may elect for the taxpayer, the tax-37 payer's spouse, and each dependent, as defined in section 152 of the Internal38 Revenue Code, claimed on such taxpayer's Idaho income tax return, the actual39 amount of sales tax paid by such persons on food purchases that took place40 in Idaho during the taxable year, up to a maximum of two hundred fifty dol-41 lars ($250) per person. To make this election, the taxpayer shall indicate42 this choice on the taxpayer's tax return or application and submit scanned43 copies of sales tax receipts of qualifying food purchases along with the tax44 return or application. If taxes due are less than the total credit allowed,45 the taxpayer shall be paid a refund equal to the balance of the unused credit.46 The provisions of section 63-3042A, Idaho Code, shall not apply to the credit47 provided in this section. If a taxpayer meets the qualifications under the48 provisions of subsection (5) (6) of this section, such taxpayer shall not be49 eligible for the credit under this subsection. If a taxpayer misrepresents50

3 the amount of sales tax paid on food purchases on such taxpayer's tax return1 or application, the amounts that were improperly claimed shall be subject2 to recovery by the state tax commission pursuant to section 63-3045, Idaho3 Code, and the taxpayer shall be subject to the penalties provided in sections4 63-3046 and 63-3075(b), Idaho Code.5 (a) For the purposes of this subsection, "food" means the sale of food6 sold for human consumption and shall have the same definition as pro-7 vided in 7 U.S.C. 2012 as that section existed on January 1, 2025. The8 types and kinds of food products on which sales tax qualifies as credit9 by this section shall be the same types and kinds of food products that10 are eligible for purchase with benefits provided under the federal sup-11 plemental nutrition assistance program and shall not include candy,12 soda, restaurant sales of food, food sold in a heated state or heated by13 a retail seller, two (2) or more food ingredients mixed or combined by a14 retail seller for a single sale, or food sold with an eating utensil pro-15 vided by the retail seller such as a plate, knife, fork, spoon, glass,16 cup, napkin, or straw.17 (b) For the purposes of paragraph (a) of this subsection:18 (i) "Candy" means a preparation of sugar, honey, or other natural19 or artificial sweeteners combined with chocolate, fruits, nuts,20 or other ingredients or flavorings in the form of confections,21 bars, drops, or pieces. "Candy" does not include any item that22 contains more than ten percent (10%) flour by weight or requires23 refrigeration.24 (ii) "Soda" means any nonalcoholic beverage that contains natural25 or artificial sweeteners. "Soda" does not include beverages that26 contain milk or milk substitutes, greater than fifty percent (50%)27 of vegetable or fruit juice by volume, or that require preparation28 before consumption, such as powders or concentrates.29 (10) (11) Any refund shall be paid to such individual only upon his30 making application therefor, at such time and in such manner as may be31 prescribed by the state tax commission. The state tax commission shall32 prescribe the method by which the refund is to be made to the taxpayer. The33 refunds authorized by this section shall be paid from the state refund fund34 in the same manner as the refunds authorized by section 63-3067, Idaho Code.35 (11) (12) An application for any refund that is due and payable under the36 provisions of this section must be filed with the state tax commission within37 three (3) years of:38 (a) The due date, including extensions, of the return required under39 section 63-3030, Idaho Code, if the applicant is required to file a re-40 turn; or41 (b) The fifteenth day of April of the year following the year to which42 the application relates, if the applicant is not required to file a re-43 turn.44 (12) (13) The state tax commission shall provide income tax payers with45 the irrevocable option of donating credited funds accruing pursuant to this46 section. Any funds so donated shall be remitted from the refund fund to the47 cooperative welfare fund, created pursuant to section 56-401, Idaho Code,48 and shall be used solely for the purpose of providing low-income Idahoans49 with assistance in paying home energy costs.50

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SECTION 3. That Section 63-3077G, Idaho Code, be, and the same is hereby1 amended to read as follows:2 63-3077G. AGREEMENT FOR EXCHANGE OF INFORMATION WITH THE IDAHO DE-3 PARTMENT OF CORRECTION. The state tax commission and the Idaho department of4 correction shall enter into a written agreement for exchange of information5 relating to an individual's incarceration status and whether that indi-6 vidual has claimed the Idaho food tax credit pursuant to section 63-3024A,7 Idaho Code. Such information shall be confidential to the recipient and may8 be used by the Idaho department of correction and the state tax commission9 only for purposes of determining whether an incarcerated person erroneously10 claimed the food tax credit in violation of section 63-3024A(6) 63-3024A(7),11 Idaho Code. No such information shall be public unless it is used in the12 course of a judicial proceeding arising under the laws of this state. The13 information provided by the state tax commission shall be limited to name,14 date of birth, social security number, an indication as to whether the food15 tax credit was claimed under that person's name or social security number for16 a particular taxable year and incarceration status during the year at issue.17

SECTION 4. That Section 63-3077H, Idaho Code, be, and the same is hereby18 amended to read as follows:19 63-3077H. AGREEMENT FOR EXCHANGE OF INFORMATION WITH THE IDAHO DE-20 PARTMENT OF HEALTH AND WELFARE. The state tax commission and the Idaho21 department of health and welfare shall enter into a written agreement for22 exchange of information relating to an individual's receipt of federal food23 stamp benefits and whether that individual has claimed the Idaho food tax24 credit pursuant to section 63-3024A, Idaho Code. Such information shall25 be confidential to the recipient and may be used by the Idaho department of26 health and welfare and the state tax commission only for purposes of de-27 termining whether a person who was receiving federal food stamp benefits28 erroneously claimed the food tax credit in violation of section 63-3024A(5)29 63-3024A(6), Idaho Code. No such information shall be public unless it is30 used in the course of a judicial proceeding arising under the laws of this31 state. Any information disclosed by the Idaho department of health and32 welfare pursuant to the provisions of this section must be disclosed in33 compliance with the privacy act of 1974, 5 U.S.C. 552a, applicable federal34 law or regulations regarding public assistance programs and any applicable35 state law or regulation.36

SECTION 5. An emergency existing therefor, which emergency is hereby37 declared to exist, this act shall be in full force and effect on and after its38 passage and approval, and retroactively to January 1, 2026.39