Idaho Laws That May Affect Your State Income Taxes
Idaho has cut income tax rates, added new exemptions, and updated its alignment with the federal tax code — multiple times in recent years. Here's a plain-language breakdown of the laws most likely to affect what you owe on your Idaho state return.
HB 559 (2026) — AFFECTS YOUR 2025 TAX RETURN
Idaho Federal Tax Conformity — Aligns With Federal Law for 2025
Signed into law · Retroactive to January 1, 2025
What it means for you
Every year Idaho passes a “conformity bill” to sync its tax code with changes to the federal Internal Revenue Code. This year's bill aligns Idaho with the federal “One Big Beautiful Bill” — with two important exceptions Idaho chose not to adopt:
- Bonus depreciation. Idaho is not conforming to the federal bonus depreciation rules — businesses cannot use the accelerated federal write-off on their Idaho return.
- R&D expense amortization. Research and development expenses from 2022–2024 will continue their existing 5-year amortization schedule under Idaho law rather than switching to new federal rules.
The bill also prevents businesses from claiming the same R&E expenses as both a deduction and an Idaho tax credit — no double-dipping.
Passed 59–9 in the House and 28–7 in the Senate, largely along party lines. Sponsored by House Majority Leader Rep. Mike Moyle (R).
H0040 (2025) — RATE CUT + NEW EXEMPTIONS
Income Tax Rate Cut, Military Exemption & Precious Metals Capital Gains
Signed into law · Retroactive to January 1, 2025
What it means for you
This law made three changes to Idaho income taxes, all retroactive to January 1, 2025:
- Income tax rate reduced. Idaho's individual income tax rate was lowered — meaning more of what you earn stays in your pocket on your 2025 return.
- Military benefits exempted. Certain military retirement and benefit payments are now excluded from Idaho taxable income — a meaningful change for Idaho's veteran community.
- Precious metals capital gains exempted. Profits from selling gold, silver, and other precious metals are no longer subject to Idaho capital gains tax.
Passed 63–7 in the House and 27–8 in the Senate. Sponsored by Sen. Doug Ricks (R) and Rep. Dori Healey (R).
H0479 (2025) — DEDUCTIONS & CORPORATE RATES
Tax Deduction Revisions, Corporate Rate Adjustments & Taxpayer Protections
Signed April 4, 2025 · Provisions effective Jan 1 – Jul 1, 2025
What it means for you
This follow-on bill refined and extended the changes made by H0040 earlier in the session. Key changes:
- Deduction rules updated. Adjusted which expenses individuals and businesses can deduct on their Idaho return, with some provisions retroactive to January 1, 2025.
- Corporate income tax rates revised. Adjustments to the rates that Idaho businesses pay on corporate income, effective July 1, 2025.
- Taxpayer protections added. New provisions giving Idaho taxpayers additional procedural protections in their dealings with the Idaho State Tax Commission.
Passed unanimously — 66–0 in the House and 34–0 in the Senate, with bipartisan support in both chambers.
HB 521 (2024) — PREVIOUS RATE CUT
Income Tax Rate Cut: 5.8% → 5.695%
Enacted April 2, 2024 · Passed 61–6 House, 23–11 Senate
The year before H0040, Idaho lawmakers cut the individual income tax rate from 5.8% to 5.695% as part of a broader school facilities funding package. This was Idaho's third income tax cut in three years, continuing a consistent pattern of rate reduction by the Legislature.
THE BIGGER PICTURE
Idaho has cut income taxes multiple times since 2022.
The Legislature has consistently reduced individual and corporate income tax rates over the past several sessions. If you haven't updated your Idaho withholding or estimated tax payments recently, these changes may affect what you owe — or what you get back — at the end of the year.
BROWSE ALL INCOME TAX BILLS
Use Tally Idaho to search the full record of Idaho tax legislation going back to 2016 — filter by keyword, year, or sponsor to see the complete history.
Also on Tally Idaho
Idaho Laws That May Affect Your Property Taxes →Bill data is sourced from LegiScan and the Idaho Legislature's official records under Creative Commons CC BY 4.0. Tally Idaho is a nonpartisan civic project — we present the data as it is, without editorial spin.