by Logan Finney, Idaho Reports
The House Revenue and Taxation Committee introduced the first major bill of the 2022 session Wednesday morning.
Tax committee chairman Rep. Steven Harris, R-Meridian, presented the proposal.
“This is the 2022 tax relief bill. You heard much of this outlined in the governor’s state of the state address on Monday,” Harris said.
If passed into law, House Bill 436 would lower income tax rates on an ongoing basis and issue a one-time tax rebate, very similar to the tax relief bill passed last year.
“The bill does just a few simple things, but has a dramatic fiscal impact,” Harris said.
Income tax rates
The bill would simplify individual income tax brackets from five to four, and lower the top rate to 6% for income above $5,000.
The proposal comes after the state lowered tax rates and decreased the number of brackets last year under House Bill 380.
| Taxable income | 2020 rates | 2021 rates (HB 380) | Proposed 2022 rates (HB 436) |
| Less than $1,000 | 1.125% | 1% | 1% |
| $1,000 – $1,999 | 3.125% | 3.1% | 3% |
| $2,000 – $2,999 | 3.625% | 3.1% | 3% |
| $3,000 – $3,999 | 4.625% | 4.5% | 4.5% |
| $4,000 – $4,999 | 5.625% | 5.5% | 4.5% |
| $5,000 – $7,499 | 6.625% | 6.5% | 6% |
| $7,500 and over | 6.925% | 6.5% | 6% |
HB 436 would also lower the corporate tax rate from 6.5 percent to 6 percent.
Income tax rebate
Idaho residents would receive a rebate check for $75 per taxpayer and dependent, or 12% of their income tax paid in 2020, whichever is greater.
Taxpayers would have to file tax returns for both 2020 and 2021 to qualify for the rebate.
Alternatively, taxpayers would have the option to allocate their rebate toward public schools, transportation, or parks and recreation. The legislature would appropriate those earmarked funds in the 2023 legislative session.
The mechanism is similar to one which provided a rebate last year of $50 per person or 9% of income tax paid in 2019.
Fiscal impact
The bill’s fiscal note estimates $350 million in tax relief from the one-time rebates, plus $251 million in annual tax relief due to the lowered rates. Those revenues would be partially offset with money from the legislature’s tax relief fund.
The sole vote against introducing the bill was Rep. Lauren Necochea, D-Boise, who said she does not believe that income taxes are the relief that Idahoans want this year. Democrats have focused heavily on property taxes as their priority for tax relief.
Harris told the committee that the bill does not address property taxes, which are levied locally, but said that this year’s planned investments in education and infrastructure — and federal pandemic spending — should relieve some of the pressure on property taxes.
“Money is available that ought to be returned to the taxpayers also,” Harris said.
Harris did not have a specific date when he plans to hear the bill in committee for public testimony, but said it would be soon.
Editor’s note: This post was updated Jan. 13 to reflect the bill number assigned to this legislation.
Logan Finney | Associate Producer
Logan Finney is a North Idaho native with a passion for media production and boring government meetings. He grew up skiing, hunting and hiking in the mountains of Bonner County and has maintained a lifelong interest in the state’s geography, history and politics. Logan joined the Idaho Reports team in 2020 as a legislative session intern and stayed to cover the COVID-19 pandemic. He was hired as an associate producer in 2021 and they haven’t been able to get rid of him since.
