State senators listen to legislative proceedings from the Idaho Senate floor on Jan. 7, 2025. (Pat Sutphin for the Idaho Capital Sun)
The Idaho Senate, in a 27-8 vote, passed a bill on Tuesday to cut Idaho’s income tax rate, reducing state revenue by $253 million.
House Bill 40, sponsored by Sen. Doug Ricks, R-Rexburg, would do three things to cut taxes in Idaho, including:
- Reduce income tax for individuals and corporations from 5.695% to 5.3%, costing $240 million annually;
- Expand the income tax exemption to military pensions, at a cost of $12 million;
- Eliminate capital gains tax for gold bullion sales, at a cost of $1 million.
House Bill 40 is one of three bills introduced this legislative session to cut taxes, the Idaho Capital Sun previously reported. Other bills aimed to cut taxes include House Bill 61, which would increase the sales tax credit on groceries for Idaho taxpayers from $120 a year to $155, and House Bill 74 which would offer $100 million of property tax relief to Idahoans.
If all three bills are passed into law, it would offer up to $403 million in reductions to state revenues, more than the $100 million in tax reductions Idaho Gov. Brad Little called for in his State of the State address at the start of the legislative session.
Ricks said the bill would help Idaho families pay less in taxes, keep their money and ultimately stimulate the economy. But opponents criticized it as irresponsible under times of economic uncertainty nationwide.
‘We are in uncertain times’: bill opponents warn of economic recession
The Idaho Senate voted largely along party lines to advance the bill. Sen. Melissa Wintrow, D-Boise, was the first to speak against the bill. She said the bill is “irresponsible,” and would betray working families in a time of economic uncertainty.
“Here we go, chopping off this revenue (when) we couldn’t even pay our employees,” Wintrow said, recalling that it took weeks for legislators to agree on a pay raise rate for state employees. “We thought about it for weeks and then we gave them a buck to a buck 55. When they see that, how are they going to feel?”
Wintrow cited a study from the nonpartisan Idaho Center for Fiscal Policy, which said an Idaho family earning between $55,000 and $91,000 would expect to see a tax break of about $127 under House Bill 40.
Idaho Gov. Brad Little concerned about magnitude of tax cuts that reduce state revenue
“I don’t know last time you went to the grocery, but I could barely get out with $127,” Wintrow said.
Sen. Jim Guthrie, R-McCammon, was one of two Republicans to vote against the bill — the other being Sen. Jim Woodward, R-Sagle. While Guthrie said he supports tax cuts, House Bill 40 does not meet his requirements for balance and fairness.
“We are in some unique times that carry with them some incredible unknown. We must think beyond today,” Guthrie told the floor, noting the federal government has aggressively cut federal employees, federal programs and implemented significant tariffs on countries including Mexico, Canada and China.
“I’m not here to say that the actions at the federal level are a good or bad thing, and what kind of effect it’ll have on our economy,” Guthrie said. “Who knows? But the point is, we are in uncertain times.”
In response to concerns about an economic recession, legislators supporting the bill said letting Idahoans keep money would boost the economy.
“If there are hard economic times for the people of Idaho, the best thing this body can do is cut as many taxes and fees as possible,” freshman Sen. Joshua Kohl, R-Twin Falls, said.
House Bill 40 already passed the Idaho House of Representatives in a 63-7 vote. It now heads to Gov. Brad Little’s desk, who can sign it into law, allow it to pass without his signature or veto it.
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