Senate approves income tax cut

Taxes fell squarely into the Idaho Legislature’s crosshairs Monday as the Senate passed an income tax bill that reduces income taxes while a pair of House committees forwarded a bill targeting property tax relief.

The Senate sent a bill to Gov. Brad Little’s desk Monday afternoon that would reduce Idahoans' state income tax burden. House Bill 380 offers a one-time $220 million tax rebate of $50 per person or 9% of a taxpayer’s 2019 liability, whichever number is higher.

The bill then establishes $169 million in permanent, ongoing tax relief through a reduction in Idaho’s corporate and individual income tax rates, and by reducing the number of individual income tax brackets from seven down to five.

Sen. Steve Vick, R-Dalton Gardens said they are trying to give people a tax break.

"This is money that, in my opinion, was overpaid," he said. "It is not our money, and we should give it back to those people who paid it.”

HB 380 sets aside $220 million for redistribution this year, followed by $180 million in future years. The rebate will come in the form of checks to each adult, whether they file as individuals or married.

If signed into law, taxable income under $1,000 will be taxed 1%. Taxable income between $1,000 and $3,000 will be taxed $10, plus 3.1% over the $1,000 threshold.

Those with a taxable income between $3,000 and $4,000 will be taxed $72, plus 4.5% of the amount over $3,000. Those with a taxable income between $4,000 and $5,000 will be taxed $117, plus 5.5% over $4,000.

And for everyone else — those with a taxable income of $5,000 or over — they will pay $172, plus 6.5%.

The bill, which had already passed the House, passed the Senate 27-8 and now goes to Little’s desk for signature or veto.

A pair of House committees, meanwhile, fast-tracked a bill Monday that aims to increase the homeowner’s exemption while altering the inner workings of the circuit breaker.

The homeowner’s exemption, currently capped at $100,000, would rise to $125,000. The bill’s language calls for the exemption to take effect retroactively, dating back to Jan. 1 of this year.

The bill — crafted by Rep. Mike Moyle, R-Star and the House Majority leader — also calls to increase the cap on the property tax reduction program, better known as the circuit breaker. But that cap, which would escalate from $1,320 for qualified landowners to $1,500, also would exclude those same homeowners the following year if their assessed value exceeds 125 percent of a county’s median average. Those excluded homeowners could then choose to go to the state’s tax deferral option.

“This year, and last year, the year before, for several years, we’ve heard a lot of concern about property taxes,” Moyle said before the House Ways and Means Committee Monday morning. “We, as the Legislature, have had difficulty passing anything that has been meaningful in addressing the issue of property taxes.”

The committee — helmed by Rep. Paul Amador, R-Coeur d’Alene — voted to approve the legislative note into a bill. House Bill 389 was then fast-tracked to House Revenue and Taxation.

But in Monday afternoon’s Rev and Tax meeting, opponents came forward against the bill, including opposition from AARP Idaho’s leadership, who said the circuit breaker restrictions would hurt the tax relief program’s biggest target audience: Idaho’s seniors.

“Property tax continues to be one of the most burdensome taxes for many of our low-income and older residents to absorb,” Francoise Cleveland, associate state director of advocacy for AARP Idaho, told the committee on behalf of the group’s roughly 185,000 members. “The goal of the circuit breaker property tax relief is to help older Idahoans age into their homes and communities among family and friends, and this bill … could undermine that goal.”

The bill passed Rev and Tax and now goes to the House for debate.