Idaho Gov. Brad Little gives his State of the State speech in the house chambers of the State Capitol building on Jan. 8, 2024. (Otto Kitsinger for Idaho Capital Sun)
Idaho Gov. Brad Little signed a $253 million income tax cut into law Thursday, describing it as the largest income tax cut in state history.
According to a news release issued Thursday afternoon, Little signed House Bill 40 into law.
The bill makes a few changes.
It reduces both the individual income tax rate and corporate income tax rate down from the current level of 5.695% to 5.3%.
The bill also removes the capital gains tax for the sale of gold bullion.
Finally, the bill expands the income tax exemption to military pensions.
“Idaho families and businesses need and deserve to keep more of their hard earned money,” Little said in a written statement Thursday. “It is the right thing to do. Idaho’s continued strength comes from our focus on good government and the Idaho taxpayer. I appreciate my partners in the Legislature for sharing our goal of prioritizing tax relief while taking care of the needs of a growing state. As we continue to deliver historic tax relief, we must ensure our budget balances as the Idaho Constitution requires.”
The bill was co-sponsored by House Speaker Mike Moyle, R-Star.
“This is the people’s money, not ours in government,” Moyle said in a written statement. “Today, we are delivering the single largest income tax cut in state history, and we are just getting started. Giving back the people’s money has always been and will remain a top priority of mine as speaker.”
When combined with other bills proposed during 2025 session, state’s revenue could decrease by more than $450M
While Little expressed glowing support for the tax cut Thursday, he expressed significant concern about the reduction in state revenue just one week earlier.
To pay for the tax cuts, the bill reduces state revenue by $253 million every year.
When combined with other tax cut proposals and the $50 million refundable tax credit law that Little signed into law Feb. 27 to reimburse families for education expenses including tuition at private and religious schools, legislators have put forward more than $450 million in bills and laws that reduce state revenue.
In contrast to the $450 million-plus worth of reductions, Little proposed $100 million in tax cuts in his Jan. 6 State of the State address.
Little told reporters Feb. 25 that Republican legislative leaders know “I’m not very happy about” the reductions to state revenue.
“If I would have thought we could do $450 (million), I would have proposed $450 (million),” Little told reporters Feb. 25.
In his written statement announcing that he signed the income tax cut into law, Little did not mention any concerns about revenue reductions. He did, however, mention the Idaho Constitution’s requirement that the state pass a balanced budget.
Meanwhile, Little’s budget office, the Idaho Division of Financial Management, released a preliminary monthly revenue report Monday showing that year-to-date revenues for the current fiscal year 2025 are lagging behind state projections by $57 million.
The same preliminary report showed that three major revenue sources – sales tax collections, individual income tax collections and corporate income tax collections – were all on track to come in below state projections for the month of February.
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