Idaho Bills

Amends existing law to revise the individual and corporate income tax rate and to provide for an income tax rebate.

This 2022 Tax Relief bill makes the following changes to Idaho's income tax laws: • It consolidates the income tax brackets from five brackets to four and lowers rates to 1%, 3%, 4.5% and 6% retroactive to January 1, 2022. • It lowers the corporate income tax to 6% retroactive to January 1, 2022. • It provides a one-time tax rebate of $350 million, returning approximately 12% of 2020 Idaho personal income tax (line 20) or $75 for each taxpayer and dependant, whichever is greater.

Amends existing law to revise provisions regarding filing for certain income tax refunds or credits.

This legislation would amend Title 63, Chapter 30, Idaho Code. Currently, there is a three-year statute of limitations to make a claim for credit or for refund of certain overpaid taxes. By contrast, Idaho taxpayers are responsible for underpaid taxes—plus penalties and interest—for a ten-year window. This legislation would extendthestatuteoflimitationsrelatingtoclaimsforcreditofoverpaidtaxes, allowingthemtobeoffsetagainst taxes due.

Amends existing law to revise provisions regarding taxation of adjustments of certain bonus depreciation.

Amends existing law to update references to the Internal Revenue Code regarding unemployment benefits and to update the recognition of marriage.

This bill relates to income taxes. It is the annual bill to update references to the Internal Revenue Code (IRC). The bill conforms the Idaho income tax code to changes made to the IRC that affect the 2021 taxable year. The Idaho income tax code uses federal taxable income as a starting point for both businesses and individuals. Our tax forms use federal adjusted gross income as a starting point. Idaho uses a static conformity to a specific date, currently January 1, 2021. This bill updates Idaho Code section 63-3004, to January 1, 2022 and removes obsolete definitions. Using federal taxable income as a starting point saves a tremendous amount of duplicate work. The Idaho Legislature can still decide to which items it will conform to. Not conforming at all would cause a lot of extra work and confusion for individuals, businesses, and the tax preparation industry.

Amends existing law to revise provisions regarding state and local tax treatment for affected business entities.

This legislation replaces HB510 and makes technical corrections to legislation enacted in 2021 that provided state and local tax deductions (SALT) for income taxes paid by an Affected Business Entity (ABE) on behalf of its pass-through owners. The 2021 legislation, HB317, was a SALT workaround that allowed ABEs to elect to pay state income taxes on behalf of their owners, making those tax payments fully deductible at the federalleveljustlikebusinessesthatarenotpass-throughentities. LikeHB510, thisbillalsomakestheelection available to more taxpayers by including fiscal year taxpayers and ABEs with owners that are trusts or estates. It differs from HB510 in that it allows tiered pass-through entities (entities in which other pass-through entities are owners) to use the election. It also clarifies language used in HB510 that allowed ABEs with owners who do not have Idaho income tax liability to qualify for the election without charging those members a tax they do not owe. Finally, it eliminates the unintended multiple imposition of the permanent building fund excise tax erroneously caused by HB510, so a taxpayer pays it only once.

Amends existing law to revise provisions regarding computing Idaho taxable income of multistate or unitary corporations.

This bill relates to the taxation of multistate business income in Idaho. Over the past few decades, most states have moved towards taxing multistate income based on both market-based and single-sales factor approaches. Idaho currently taxes multistate income for sales other than tangible property (ie., intangible property and services) using a "cost-of-performance" method. Cost-of-performance assigns the sales revenue to the location having the greater proportion of services performed. Market-based sourcing assigns the sales revenue to the location receiving or benefiting from the services. Changing to "market-based" sourcing for these activities will create uniformity with other states. Note that Idaho currently applies market-based sourcing to the sale of tangible property which is already uniform to other states. Idaho currently taxes multistate income using a three-factor method to apportion business income, which includes: 1) Property; 2) Payroll; and 3) Double-weighted sales. Changing to a single-sales factor to apportion income will simplify the process and also create uniformity with other states. As other states have moved away from cost-of-performance as well as three-factor apportionment methodologies, instances of double taxation for Idaho-based companies, and instances of out-of-state companies doing business in Idaho without paying income taxes have become more and more prevalent. This bill resolves these two problems, provides for a more-favorable tax environment for Idaho, and simplifies the taxation of multistate income for both taxpayers and the State Tax Commission.