First bill of Idaho legislative session aims to implement Gov. Little’s income tax cuts

The first bill Idaho legislators introduced during the new 2022 legislative session is a measure to implement the tax cuts Gov. Brad Little outlined in Monday’s State of the State address.

On Wednesday morning, the House Revenue and Taxation Committee voted to introduce a new tax bill pushed by Rep. Steven Harris, R-Meridian.

The bill would do several things if passed into law:

  • Reduce the number of individual income tax brackets from five to four. 
  • Reduce the top individual income and corporate income tax rates from 6.5% to 6%. Individual Idahoans who make at least $7,939 in taxable income are in the top tax bracket
  • Provide $350 million in income tax rebates for Idahoans, with the money providing rebates of $75 per taxpayer and dependent or 12% of the taxpayer’s 2020 tax return, whichever amount is greater. 

“The bill does just a few simple things, but it has dramatic fiscal impact, both for our taxpayers and I suppose also for the state government,” Harris said during the bill’s introductory hearing. 

The money for rebates would come from spending down some of the state’s record $1.9 billion surplus, while Little said reducing income tax rates would cost $251 million. On Wednesday, Harris said $94 million of that cost would come from the tax relief fund, which is collected from online sales taxes paid. 

On Monday, Little said the proposal would be the largest tax cut in state history.

Rep. Lauren Necochea, D-Boise, voted against introducing the bill. During a new conference Monday, Democratic leaders criticized Little for calling for income tax cuts instead of reducing property taxes.

“This is just not the tax relief that I think Idahoans want, so I will not be able to support the motion to print,” Necochea said. 

Harris said local governments, not the state government, collect property taxes so he said it is harder and less fair for the Legislature to modify property taxes. 

Harris serves as the committee’s chairman and Little outlined the bill in Monday’s speech, which both signal that the bill has clout behind it right out of the gate. 

Harris’ bill will be formally assigned a bill number and posted online on the Legislature’s website for the public to view once it is read across the desk on the House floor, which could happen later Wednesday morning or on Thursday morning. 

Wednesday morning’s introduction is only the first step in a bill’s journey, but it clears the way for the bill to return to the House Revenue and Taxation Committee for a full public hearing. In order for the bill to become law, it would need to be passed out of committee, pass with a simple majority of votes on the House floor, then repeat that entire process in the Senate and then be signed by Little. 

More information about how a bill becomes law is available on the Idaho Legislature’s website. 

Idaho Legislature tackles big bills early in 2022 session

Introducing the new tax cut proposal early in the session signals that — at least initially — legislators are interested in moving things along before the 2022 primary elections, which are scheduled for May 17. 

Speaker of the House Scott Bedke, R-Oakley, told reporters Monday a significant tax bill would likely be introduced during this first week of the session. 

The budget-setting Joint Finance-Appropriations Committee plans to hit the ground running hearing one of the state’s largest and most complicated budgets, the public school budget, with its first budget hearing of the year coming up on Monday. 

During the outset of Wednesday’s committee hearing, Harris briefed legislators on several legislative deadlines that are designed to get the session moving and then wrap things up. 

“Obviously these, even now, feel early and they are but we want to keep things moving along, because we have a target sine die (adjournment) date of March 25 or sooner,” Harris said. 

The 2021 session was the longest in state history, at 311 days, included a lengthy, open-ended recess and didn’t adjourn for the year until Nov. 17.

Little started the 2022 legislative session Monday by delivering the annual State of the State address. In his speech and 2023 budget proposal, Little called for historic investments in education, transportation and tax cuts.

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