Amends and repeals existing law to revise the income tax rate, to extend the child tax credit indefinitely, and to repeal the Parental Choice Tax Credit.

LEGISLATURE OF THE STATE OF IDAHO Sixty-eighth Legislature Second Regular Session - 2026 IN THE HOUSE OF REPRESENTATIVES HOUSE BILL NO. 782 BY RUBEL AN ACT1 RELATING TO TAXATION; AMENDING SECTION 63-3024, IDAHO CODE, TO REVISE2 PROVISIONS REGARDING INDIVIDUALS' TAX AND TAX ON ESTATES AND TRUSTS;3 AMENDING SECTION 63-3025, IDAHO CODE, TO REVISE PROVISIONS REGARDING4 THE TAX ON CORPORATE INCOME; AMENDING SECTION 63-3029L, IDAHO CODE, TO5 REVISE A PROVISION REGARDING THE CHILD TAX CREDIT; REPEALING SECTION6 63-3029N, IDAHO CODE, RELATING TO THE IDAHO PARENTAL CHOICE TAX CREDIT;7 AMENDING SECTION 67-1230, IDAHO CODE, TO REVISE PROVISIONS REGARDING8 THE IDAHO PARENTAL CHOICE TAX CREDIT ADVANCE PAYMENT FUND; REPEALING9 SECTION 67-1230, IDAHO CODE, RELATING TO THE IDAHO PARENTAL CHOICE TAX10 CREDIT ADVANCE PAYMENT FUND; AND DECLARING AN EMERGENCY, PROVIDING11 RETROACTIVE APPLICATION, AND PROVIDING AN EFFECTIVE DATE.12

Be It Enacted by the Legislature of the State of Idaho:13

SECTION 1. That Section 63-3024, Idaho Code, be, and the same is hereby14 amended to read as follows:15 63-3024. INDIVIDUALS' TAX AND TAX ON ESTATES AND TRUSTS. (1) For each16 taxable year, a tax measured by Idaho taxable income as defined in this chap-17 ter is hereby imposed upon every individual, trust, or estate required by18 this chapter to file a return.19 (2)(a) The tax imposed upon individuals, trusts, and estates shall be20 computed at the rate of five and three-tenths percent (5.3%) five and21 three hundred twenty-five thousandths percent (5.325%) of taxable in-22 come over two thousand five hundred dollars ($2,500).23 (b) For taxpayers filing a joint return pursuant to the provisions of24 section 63-3031, Idaho Code, the tax imposed shall be computed at the25 rate of five and three-tenths percent (5.3%) five and three hundred26 twenty-five thousandths percent (5.325%) of taxable income over five27 thousand dollars ($5,000). For the purposes of this section, a return28 of a surviving spouse, as defined in section 2(a) of the Internal Rev-29 enue Code, and a head of household, as defined in section 2(b) of the30 Internal Revenue Code, shall be treated as a joint return.31 (3) For taxable year 2000 and each year thereafter, the state tax com-32 mission shall prescribe a factor that shall be used to compute the Idaho in-33 come tax thresholds provided in subsection (2) of this section. The factor34 shall provide an adjustment to the Idaho tax thresholds so that inflation35 will not result in a tax increase. The Idaho tax thresholds shall be adjusted36 as follows: multiply the last threshold amount by the percentage (the con-37 sumer price index for the calendar year immediately preceding the calendar38 year to which the adjusted threshold amount will apply divided by the con-39 sumer price index for calendar year 1998). For the purpose of this computa-40 tion, the consumer price index for any calendar year is the average of the41 consumer price index as of the close of the twelve (12) month period for the42

2 immediately preceding calendar year, without regard to any subsequent ad-1 justments, as adopted by the state tax commission. This adoption shall be2 exempt from the provisions of chapter 52, title 67, Idaho Code. The consumer3 price index shall mean the consumer price index for all U.S. urban consumers4 published by the United States department of labor. The state tax commission5 shall annually include the factor as provided in this subsection to multiply6 against Idaho taxable income using the thresholds in this section to arrive7 at that year's Idaho taxable income for tax threshold purposes.8 (4) In the case of a trust that is an electing small business trust as9 defined in section 1361 of the Internal Revenue Code, the special rules for10 taxation of such trusts contained in section 641 of the Internal Revenue Code11 shall apply, except that the individual rate provided in subsection (2)(a)12 of this section shall apply in computing tax due under this chapter.13 (5) The state tax commission may promulgate rules defining the condi-14 tions upon which such returns shall be filed.15

SECTION 2. That Section 63-3025, Idaho Code, be, and the same is hereby16 amended to read as follows:17 63-3025. TAX ON CORPORATE INCOME. (1) For each taxable year, a tax is18 hereby imposed on the Idaho taxable income of a corporation, other than an19 S corporation, that transacts or is authorized to transact business in this20 state or has income attributable to this state. The tax rate imposed by this21 section shall be as follows:22 (a) For each taxable year, commencing on and after January 1, 2001, the23 tax imposed by this section shall be equal to seven and six-tenths per-24 cent (7.6%) of Idaho taxable income.25 (b) For each taxable year, commencing on and after January 1, 2012, the26 tax imposed by this section is changed and shall be equal to seven and27 four-tenths percent (7.4%) of Idaho taxable income.28 (c) For each taxable year, commencing on and after January 1, 2018, the29 tax imposed by this section is changed and shall be equal to six and nine30 hundred twenty-five thousandths percent (6.925%) of Idaho taxable in-31 come.32 (d) For each taxable year, commencing on and after January 1, 2021,33 the tax imposed by this section is changed and shall be equal to six and34 five-tenths percent (6.5%) of Idaho taxable income.35 (e) For each taxable year, commencing on and after January 1, 2022, the36 tax imposed by this section is changed and shall be equal to six percent37 (6%) of Idaho taxable income.38 (f) For each taxable year, commencing on and after January 1, 2023, the39 tax imposed by this section is changed and shall be equal to five and40 eight-tenths percent (5.8%) of Idaho taxable income.41 (g) For each taxable year, commencing on and after January 1, 2024, the42 tax imposed by this section is changed and shall be equal to five and six43 hundred ninety-five thousandths percent (5.695%) of Idaho taxable in-44 come.45 (h) For each taxable year, commencing on and after January 1, 2025, the46 tax imposed by this section is changed and shall be equal to five and47 three-tenths percent (5.3%) of Idaho taxable income.48

3 (i) For each taxable year, commencing on and after January 1, 2026, the1 tax imposed by this section is changed and shall be equal to five and2 three hundred twenty-five thousandths percent (5.325%) of Idaho tax-3 able income.4 (2) In the case of an S corporation that is required to file a return un-5 der section 63-3030, Idaho Code, a tax is hereby imposed at the rate provided6 in subsection (1) of this section upon both:7 (a) Net recognized built-in gain attributable to this state. The8 amount of net recognized built-in gain attributable to this state shall9 be computed in accordance with section 1374 of the Internal Revenue10 Code subject to the apportionment and allocation provisions of section11 63-3027, Idaho Code; and12 (b) Excess net passive income attributable to this state. The amount of13 excess net passive income attributable to this state shall be computed14 in accordance with section 1375 of the Internal Revenue Code subject to15 the apportionment and allocation provisions of section 63-3027, Idaho16 Code.17 (3) The tax imposed by subsection (1) or (2) of this section shall not be18 less than twenty dollars ($20.00); provided that the twenty-dollar ($20.00)19 minimum payment shall not be collected from nonproductive mining corpora-20 tions.21 (4) The tax imposed by this section shall not apply to corporations22 taxed pursuant to the provisions of section 63-3025A, Idaho Code.23

SECTION 3. That Section 63-3029L, Idaho Code, be, and the same is hereby24 amended to read as follows:25 63-3029L. CHILD TAX CREDIT. (1) For taxable years beginning on or af-26 ter January 1, 2018, and before January 1, 2026, there shall be allowed to a27 taxpayer a nonrefundable credit against the tax imposed by this chapter in28 the amount of two hundred five dollars ($205) with respect to each qualifying29 child of the taxpayer. For purposes of this section, the term "qualifying30 child" has the meaning as defined in section 24(c) of the Internal Revenue31 Code. In no event shall more than one (1) taxpayer be allowed this credit for32 the same qualifying child. This credit is available only to Idaho residents.33 Any part-year resident entitled to a credit under this section shall receive34 a proportional credit reflecting the part of the year in which the part-year35 resident was domiciled in Idaho.36 (2) In the case of divorced parents or parents who do not live together,37 if the qualifying child is in the custody of one or both of the child's par-38 ents for more than one-half of a calendar year, such child is the qualifying39 child of the custodial parent for the taxable year beginning during such cal-40 endar year. However, the child may be the qualifying child of the noncusto-41 dial parent if either of the following requirements are met:42 (a) A court of competent jurisdiction has unconditionally awarded, in43 writing, to the noncustodial parent the tax benefits associated with44 the child pursuant to section 32-706, Idaho Code, and the noncustodial45 parent attaches a copy of the court order to the noncustodial parent's46 income tax return for the taxable year; or47 (b) The custodial parent signs a written declaration that such custo-48 dial parent will not claim the credit of this section with respect to49

4 such child for any taxable year beginning in such calendar year and the1 noncustodial parent attaches such written declaration to the noncusto-2 dial parent's income tax return for the taxable year beginning during3 such calendar year.4

SECTION 4. That Section 63-3029N, Idaho Code, be, and the same is hereby5 repealed.6

SECTION 5. That Section 67-1230, Idaho Code, be, and the same is hereby7 amended to read as follows:8 67-1230. IDAHO PARENTAL CHOICE TAX CREDIT ADVANCE PAYMENT FUND. (1)9 There is hereby established in the state treasury the Idaho parental choice10 tax credit advance payment fund, to be administered by the state tax commis-11 sion.12 (2) Moneys in the fund shall:13 (a) Consist of the following:14 (i) Legislative appropriations and transfers;15 (ii) Donations and contributions made to the fund;16 (iii) Reversions of unused, paid back, or recovered advance pay-17 ment funds; and18 (iv) Interest earned on idle moneys in the fund; and19 (b) Be continuously appropriated to pay advance payments awarded un-20 der the Idaho parental choice tax credit program established in section21 63-3029N, Idaho Code.22 (3) Notwithstanding any provision of law to the contrary, the state23 controller shall transfer the unobligated cash balance remaining in the24 Idaho parental choice tax credit advance payment fund to the general fund on25 July 1, 2026, or as soon thereafter as practicable but no later than December26 1, 2026.27

SECTION 6. That Section 67-1230, Idaho Code, be, and the same is hereby28 repealed.29

SECTION 7. An emergency existing therefor, which emergency is hereby30 declared to exist, Sections 1, 2, 3, and 4 of this act shall be in full force31 and effect on and after passage and approval, and retroactively to January32 1, 2026; Section 5 of this act shall be in full force and effect on and after33 passage and approval; and Section 6 of this act shall be in full force and34 effect on January 1, 2027.35