Idaho is one of nine states that that would gain state tax revenue if some or all of the Bush tax cuts are allowed to expire, according to a new report from Stateline.org. The reason: The nine states collect state taxes based on federal taxable income, not adjusted gross income. So if increased deductions go away, federal taxable incomes rise, and people would pay more in state income taxes. Stateline reported that in these states, a legislative decision on whether to match federal tax changes “would allow them to raise revenues without legislators having to vote on a tax increase.”
Idaho almost always matches its tax code to federal changes, in a process dubbed “conformity” that usually sees little opposition in the Idaho Legislature - even when it costs the state millions - because matching the federal tax code is so much easier on Idaho filers, who otherwise would have to essentially keep two sets of books for state and federal taxes.
Betsy Z. Russell covers Idaho news from The Spokesman-Review's bureau in Boise.
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