The latest bill to conform with federal tax changes is heading to the House floor despite overwhelming opposition from the public.
Under the proposal considered by the House Revenue and Taxation Committee, Idaho would forgo taxing income from tips, overtime wages and the interest on auto loans, among other things.
“It’s about putting more dollars back in your average Idahoan’s pocket,” said Rep. Jeff Ehlers (R-Meridian), who sponsors the bill.
It would also add significant tax write-offs for businesses that invest in research and innovation efforts.
All new expenses related to research incurred after Jan. 1, 2025 could be claimed immediately, while those currently on a depreciation schedule would need to continue with those plans.
In all, Ehlers estimates the cost at $155 million in the current fiscal year with another $175 million in the fiscal year beginning July 1.
Idaho’s tax collections had faltered over the past several months, projecting a deficit at points.
After a massive rebound in the corporate income tax category in December, the latest forecast from the Legislative Services Office estimates a positive $106.2 million ending balance for the year.
Co-chairs for the Joint Finance and Appropriations Committee have asked all state agencies to possibly cut another 1% to 2%, which several agencies have said would hurt public safety.
As the Idaho Capital Sun reported Friday, those cuts could result in the furlough of every commissioned Idaho State Police trooper, as well as the 1,200 prison staff with the Idaho Department of Correction.
Given the added pressure this bill would bring, Boise resident Georgia Boatman told committee members to push pause on the idea.
“When you find yourself in a hole, quit digging. This is good advice for this committee and this legislature,” Boatman said.
Donna Carlson, another critic from Boise, said Idaho’s budget can’t absorb that hit after years of income tax cuts. She pushed back on those who say the state needs to slice budgets further.
“Our so-called spending problem is because we are humans with needs who require services that in many cases only the government can provide,” Carlson said.
Rep. David Cannon (R-Blackfoot), who chairs the committee, said he’d received about 200 emails mostly against the bill as well.
The only people supporting the proposal in part included representatives from large businesses, the Associated Taxpayers of Idaho and the Idaho Society of Certified Professional Accountants.
However, they each said they would’ve preferred the bill to adopt further tax breaks for companies to be more uniform to federal code.
Shortly before the vote, Ehlers pushed back against critics worried about potential budgetary outcomes that are decided by JFAC.
“It is not a budget bill. It is not addressing those things. It is about our tax policy and how we conform to the One Big Beautiful Bill,” he said.
However, JFAC does not take public testimony during any of its meetings. One of its co-chairs, Rep. Josh Tanner (R-Eagle), reiterated that stance earlier this year when another committee member requested they hear from the public about potential cuts to Medicaid.
Members on the revenue and taxation committee eventually passed Ehlers’ bill along party lines.
Rep. John Shirts (R-Weiser) said cutting tax on tips and overtime ultimately helps rural Idahoans like his constituents..
“I think when you get outside this Boise bubble, you get to a district like mine that is blue collar, hard working Americans and this is the type of legislation that truly benefits them,” Shirts said.
Rep. John Gannon (D-Boise), one of two Democrats to vote against it, said he also supports excluding taxes on tips and overtime and has a bill in the works to give lawmakers an alternative to this option.
House lawmakers could take up Ehler’s bill later this week.
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