Idaho governor signs $600 million income tax cut

Governor Brad Little signed into law House Bill 436, the largest tax cut in Idaho history.

Little hosted a signing ceremony Friday afternoon at In Time Tec in Meridian with several legislative leaders, including House Speaker Scott Bedke, R-Oakley; House Majority Leader Mike Moyle, R-Star; and Senate Pro Tem Chuck Winder, R-Boise.

House Bill 436 was the first bill introduce this sessionwhich began on January 10. The proposal was outlined in Little’s state of the state address and taps into this year’s $1.9 billion surplus.

The package includes $350 million for a one-time expense of tax refunds for most Idaho taxpayers, and $251 million in income tax reductions on an annual basis beginning in 2023, for a total of $600 million. The bill included an emergency clause with a date retroactive to January 1. According to a news release, the rebate will be distributed to Idahoans this spring and income tax brackets will be lowered beginning in July.

What will change now that the bill has the force of law?

  • The number of personal income tax brackets will be reduced from five to four (see the table below this article for the breakdown).
  • The top personal income tax bracket will be set at 6%, which would apply to Idahoans with taxable income of $5,000 or more.
  • The corporate tax rate will be lowered from 6.5% to 6%.
  • The $350 million in tax refunds will apply to 12% of Idaho’s 2020 personal income tax return, or $75 for each taxpayer and dependent, whichever is greater.

Little said he had three ambitious goals for the coming year: significant tax relief and significant investment in education and transportation.

“I just didn’t think we’d be doing them all at once, and with my partners here behind me, we’ll have it,” Little said. “I remember my mum telling me you can’t have your cake and eat it too, but we kind of are this year. This is a great sign for the people of Idaho, a great sign for the economy, and we’re thrilled about it.

According to estimates from Little’s office, the state will send more than $1 billion in income tax cuts to Idahoans over the next five years with the addition of the bill cut. 436.

“The government never spends its own money, it takes it out of the pockets, off the tables of the citizens, and the government generally tends never to give anything back,” said Sen. Jim Rice, R-Caldwell. “…(We’ve been working) to make sure that we prioritize the money you’ve given to our citizens, and we’re not going to go that deep into your pockets either.”

Jeet Kumar, CEO of In Time Tec, also spoke at the event and said the tax cut would make Idaho more competitive and allow businesses like his to grow.

“Point five (percentage) isn’t much, but it’s a bit when talking about profits,” Kumar said.

Idaho Democrats say tax cut misdirected

Democrats in both houses of the Idaho Legislature have criticized the tax cut, saying it helps wealthy people the most while ignoring ideas to cut property taxes, repeal the sales tax on groceries and reimbursing additional levies for school districts.

Sen. Carrie Semmelroth, D-Boise, told the Idaho Capital Sun that since voting against the bill when it came before the Senate Local Government and Taxation Committee, she hasn’t heard anyone who wanted her to vote for legislation on the Senate floor.

“Instead, they called for meaningful property tax relief, the repeal of the grocery tax, and investments in areas of Idaho that are underfunded,” Semmelroth said. .

Senate Democrats said in a press release that under the new law, someone with annual taxable income of $1 million will receive an ongoing annual tax cut of more than $5,000 in addition to a one-time rebate of nearly $8,000, and low-income Idahoans will receive a rebate of about $75.

Democrats added that the high price of the tax cut will absorb much of the excess funds that could instead be directed to other needs, including education and infrastructure needs that have been under-funded. funded for many years, according to reports from the Idaho Office of Performance Evaluations.

“If you don’t make your mortgage payment for months, it might seem like you have a lot of money in the bank,” Semmelroth said.

Several other property tax and grocery tax and grocery tax credit bills are before the Idaho Legislature, along with related bills that, according to lawmakers, have not yet been introduced. Semmelroth said while some of these bills are ones she will support, there is not enough legislation that will help working-class Idahoans in areas such as property tax relief.

The legislative session is expected to last until the end of March.

Idaho Capital Sunshine is part of States Newsroom, a network of news outlets supported by grants and a coalition of donors as a 501c(3) public charity. Idaho Capital Sun maintains editorial independence. Contact Editor-in-Chief Christine Lords with any questions: [email protected] Follow Idaho Capital Sun on Facebook and Twitter.

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