Income tax bill moves to House floor

income tax return paper
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by Logan Finney, Idaho Reports

The House Revenue and Taxation committee voted Tuesday morning to send this year’s big income tax cut and rebate bill to the House floor for consideration.

House Bill 436 would consolidate state income tax brackets at lower rates and issue a rebate check of $75 per person or 12% of income tax paid in 2020, whichever is greater.

Bill sponsors estimate the one-time rebates will total around $350 million, while the tax rate reductions will decrease state revenues by about $251 million per year.

Rep. Mike Moyle, R-Star, touted the proposal as returning tax money to Idahoans as residents face high gas prices and historic inflation “at no fault of our own.”

The bill is essentially a repeat of last year’s tax cut and rebate framework, which threw sparks on the House floor as members debated the opportunity cost of spending general fund dollars on lowering taxes rather than addressing education and property tax needs.

Those concerns are back again this year, as some lawmakers are hesitant to commit such a large sum of money to tax cuts at the very beginning of the legislative session.

Rep. James Ruchti, D-Pocatello, said the state has the “opportunity of a lifetime” to invest the historic $1.9 billion budget surplus in addressing the state’s backlog of needs.

“No one is asking for income tax or corporate tax cuts,” Ruchti said in a press release after the vote. “This year, we have the opportunity to be creative and really invest in our working families. This proposal only leaves them further behind.”

Rep. Tammy Nichols, R-Middleton, said she was receiving emails during the hearing that asked her to vote against the bill. She described the rebate as “breadcrumbs” and said she would prefer to see tax relief in the form of addressing property taxes or repealing the grocery tax, but decided to support sending HB 436 to the floor at this time.

Moyle argued that upcoming legislation to invest in education – like the priorities outlined in last week’s state of the state address – won’t be sidelined due to the tax bill.

“We have enough money to do it all,” Moyle said.

He also pointed out that HB 436 would allow taxpayers to send their rebate back to the state to be spent on either education, transportation or parks and recreation.

“If that’s where you want it, [in education,] you have that opportunity in this bill,” Moyle said.

The bill would also lower Idaho’s corporate income tax rate from 6.5% to 6%. Moyle and several business industry lobbyists said that would help bring Idaho more in line with other states.

“We need to make Idaho competitive with surrounding states. This bill accomplishes that,” Moyle said.

According to the Tax Foundation, 11 states have top corporate rates at or below five percent. Idaho is one of 29 states with a single-rate corporate tax.

StateTop Corporate Tax Rate
Nevadagross receipts tax
Oregon7.6% and gross receipts tax
Washingtongross receipts tax

The bill was approved on a party-line voice vote and now moves to the full House for consideration. It will need approval from the House, the Senate and the governor before becoming law.

<strong>Logan Finney</strong> | Associate Producer
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. 

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