by Logan Finney, Idaho Reports
A bill to increase Idaho’s food tax credit passed out of a House committee Monday morning.
The grocery credit is currently $100 for full-time Idaho residents and $120 for those age 65 and older. House Bill 509 would increase those rates to $120 and $140 respectively.
“The credit hasn’t been changed since 2015,” said bill sponsor Sen. Steve Vick, R-Dalton Gardens. “We have seen inflation, certainly since then, and particularly in the last year.”
Miguel Legaretta, president of the Associated Taxpayers of Idaho, told the committee that 87% of Idahoans claimed the credit in 2020.
The bill would pay for the increase with $32 million annually from the legislature’s tax relief fund. The change would go into effect for tax year 2023, which means Idaho residents wouldn’t see the credit increase until filing their taxes in early 2024.
“Although it seems to many of us that there’s a lot of money for tax relief, there was concern that we have a source to pay for it,” Vick said. “The revenue is clearly there in the tax relief fund in 2023.”
Rep. Tammy Nichols, R-Middleton, inquired why the implementation is delayed by two years rather than the legislature issuing immediate grocery tax relief to Idahoans.
“The tax relief fund itself doesn’t have the revenue to pay for it before that,” Vick said.
The tax relief fund is an account that receives sales taxes from certain online retailers without a physical presence in the state of Idaho. Click here for an explainer of the tax relief fund’s origins.
On Friday, the governor signed into law the $600 million income tax cut and rebate, HB 436, which transferred $94 million out of the tax relief fund. That new law also authorizes up to $204 million annually from the fund to offset the ongoing reduction in income tax revenues.
Division of Financial Management administrator Alex Adams told Idaho Reports that as of last week, the tax relief fund held $131,652,875.34 before the transfer. After spending $94 million for rebate checks, HB 436 leaves the tax relief fund with a balance of roughly $37.6 million.
Adams said the fund’s revenue has grown annually, and it is forecasted to collect $204 million dollars in the upcoming fiscal year.
Nichols has been a vocal proponent of repealing Idaho’s sales tax on food — also known as the grocery tax — including when the legislature did so unsuccessfully in 2017, before she was a lawmaker. She voted in favor of the $20 credit increase, but said she may still decide to vote against it on the House floor.
“I still call it breadcrumbs,” Nichols said. “I still don’t see good tax relief legislation coming forward and I’m losing hope in regards to that effort.”