Idaho Bills

Amends and adds to existing law to provide for an initiative petition to raise or lower the property tax budgets for fire protection districts and ambulance service districts and to revise provisions regarding certain property tax budget limits.

RS33842C1 / H0959 This legislation addresses the limitations HB 389 (2021) places on the growth of property taxes for fire protection districts and ambulance service districts. These constraints have prevented these districts in a small number of fast-growing areas from being able to keep up with the public safety service demands of their growing populations. Specifically, this legislation: 1. Increases the cap on overall property tax growth fire protection districts and ambulance service districts from 8% to 15%, if enough new construction and annexed territory has been added to cover the cost of these extra property taxes. 2. Provides that new construction and annexations are added to property tax budgets of fire protection districts and ambulance service districts based on the prior year’s levy rate, rather than the estimated current year levy rate. 3. Prohibits the accumulation of additional future foregone property tax balances in fire protection and ambulance service districts. Foregone property tax balances from prior to 2026 may continue to be retained and used in the future, under statutory limitations. 4. Provides a new voter initiative process for fire protection districts and ambulance service districts that would allow voters to increase or reduce property tax budgets, using the same threshold for passage that the law currently provides for voters to increase property taxes beyond statutory limits (two-thirds vote).

Amends and adds to existing law to expand the homestead property tax exemption, to increase the sales tax rate, and to direct sales tax revenue to taxing districts to replace property tax revenue lost from the homestead exemption expansion.

RS33792 / H0961 This legislation would eliminate all property taxes on a person’s primary place of residence forever. It would not affect any other property, nor would it allow property taxes to increase on other nonresident properties. The lack of property taxes would have a fiscal impact. Please see the

Adds to existing law to establish an excise tax on international money transmissions and to establish provisions to provide certain credits or refunds of the tax.

RS33695 / S1440 This legislation imposes an excise tax on international money transmissions originating in Idaho in order to address the transfer of wealth out of the Idaho economy. Specifically, the bill creates a new section in Idaho Code to assess a tax of $5 on the first $500 transmitted and 4% on amounts exceeding $500 per transaction. The tax is collected at the point of transaction by licensed money transmitters and remitted quarterly to the Idaho State Tax Commission. To ensure fairness for Idaho residents, the bill also provides a refundable income tax credit or refund for individuals who are legally present in the United States and who pay the excise tax, provided they submit proper documentation. The bill further establishes administrative procedures for reporting, enforcement, and distribution of revenues. After accounting for refunds and credits, the remaining funds are deposited into the State General Fund.

Adds to existing law to provide for the review and expiration of sales tax exemptions.

This legislation calls for LSO to conduct an annual review of existing sales tax exemptions to provide the legislature with an analysis of the public purpose, fiscal impact, and recommendation as to whether the exemption should continue. It also provides for the sunsetting of exemptions upon the later of 2031 or 10 years after enactment unless the legislature acts to renew the exemptions.

Amends existing law to revise a sales tax exemption for data center equipment and to revise a certain property tax exemption for certain capital investments.

This legislation amends the sales tax exemption for data centers in six key ways. This legislation does the following: 1) adds two additional criteria for qualification for the exemption related to energy and water consumption, 2) narrows the original sales tax exemption to only be applicable to the internal servers, 3) prohibits data centers constructed after April 1, 2026 that opt-in to the sales tax exemption from also claiming the property tax abatement in 63-4502, 4) allows for the sales tax exemption to only be available for 20 years for each project, 5) requires the tax commission to report annually on the approximate amount of sales tax revenue not collected as a result of this policy, and 6) requires the tax commission to submit a report every 5 years to the legislature with an analysis of the effects of the exemption and data centers on Idaho’s economy, energy resources, and water resources. This legislation provides that data center projects currently under construction may continue with the sales tax exemption provisions (construction materials and internal server equipment) as originally provided when 63-3622VV was enacted in 2020; however, the new 20-year provision will apply to those projects currently under construction.

Amends existing law to revise provisions regarding the homestead property tax exemption.

RS33659 / H0885 This legislation clarifies who qualifies for the homestead exemption. Homeowners can't claim this exemption if they have a similar exemption in another state. Their Idaho license or I.D. must show the same address as the property they're claiming. Homeowners can also use an individual Idaho tax return for verification if it shows the same address. To maintain the exemption, they must also live in Idaho at least six months a year, unless they're serving in the military or on a religious mission. If a homeowner runs for office, their homestead address will qualify as their candidate residence address.

Amends, repeals, and adds to existing law to repeal and replace the Idaho Parental Choice Tax Credit and the Idaho Parental Choice Tax Credit Advance Payment Fund.

The purpose of this bill is to give the state of Idaho the flexibility to increase revenue should the uncertainty concerning state and national economic conditions require considering doing so. This bill does not repeal H93. It only puts a potential one-year pause on continuing it in 2027and then resumes it in 2028.

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.

This legislation would permanently extend the child tax credit of $205 per qualifying child, and offsets that by eliminating the parental choice tax credit and adjusting the income tax rate from 5.3% to 5.325%. for individuals and corporations.

Amends existing law to update references to the current Internal Revenue Code and to revise certain tax credits related to capital investments and research activities.

This proposed legislation is the annual tax conformity 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 2025 tax year. It fully conforms Idaho to the tax changes in the One Big Beautiful Bill, including recapture of past R&E, except for bonus deprecation which Idaho has historically not conformed to. This proposed legislation also ensures that businesses cannot use the same R&E expenses for both a deduction and Idaho tax credits.

Amends existing law to exempt sales to or purchases by the Salvation Army.

To add the Salvation Army to the list of non-profits who are eligible for a use and sales tax exemption.

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

The purpose of this bill is to give the state of Idaho the flexibility to increase revenue should the uncertainty concerning state and national economic conditions require considering doing so. This bill does not repeal H40. It only puts a potential one-year pause on just the income tax portion of H40. It does not change the military or capital gains on precious metals portion of H40. The bill restores the income tax rate to the rate prior to H40 (5.695%) only for tax year 2026 and then returns to the tax rate in H40 (5.3%) for tax year 2027 and beyond. If this bill should become law and economic conditions in January 2027 are favorable, this law could be repealed retroactive to January, 2026 by the 2027 legislature and the income tax rate would remain unchanged at 5.3% for 2026 and beyond.

Amends existing law to provide certain procedures for the credit and refund of certain sales taxes paid erroneously.

RS33636 / H0891 Amends Idaho Code Title 63 Chapter 36 with a new paragraph (0) which provides that a seller of property who mistakenly collects a sales tax instead of an applicable use tax (for property that improves real property rather than for tangible personal property) is entitled to a credit for the amount of sales tax paid and is required to refund the customer the sales tax paid (provided the customer requests said refund).

Amends existing law to revise provisions certain definitions related to sales and use tax.

This bill is to clarify the price of a product that sales tax is owed when dealing with hotel loyalty points between the owners and operators, and off-road vehicle rebates between the manufacturer and retailer. This doesn't change how those industries are currently collecting and remitting the sales tax and what constitutes the price of the good or "sale" but does stop a recent reinterpretation of current statute that was recently brought to light.