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News >  Pacific NW

Idaho lawmakers propose sweeping cuts to income, sales taxes

UPDATED: Tue., Feb. 16, 2021

By Keith Ridler Associated Press

BOISE — Sweeping tax cuts proposed Tuesday by Idaho lawmakers would slash assessments on all income brackets and lower the sales tax from 6% to 5.3% beginning next year.

The complex, 17-page proposal was introduced in a House committee after Republican Gov. Brad Little called for $450 million in tax relief, including $295 million in one-time cuts and $160 million in permanent tax cuts. The proposed bill estimates it would result in $284 million in tax relief a year.

Despite the pandemic, Idaho has a budget surplus of about $600 million. Officials attribute much of that to federal virus relief funds and an influx of new residents.

The bill introduced in the House Revenue and Taxation committee would also eliminate a grocery tax credit that amounts to $100 a year for most people and $120 for those 65 and over. It would leave sales taxes on groceries in place.

Lawmakers in the legislation estimate eliminating the grocery credit would save the state about $165 million in fiscal years 2022 and 2023. The plan would also tap into a tax relief fund for about $100 million a year. That money comes from sales taxes on online sales.

The proposal would reduce all income tax brackets and drop the top bracket from 6.925% to 6.5% retroactive to Jan. 1.

The cuts in sales tax, income tax and corporate tax would cost the state about $265 million in fiscal year 2022 and $435 million in fiscal year 2023, according to the legislation.

The bill estimates that all the provisions taken together would leave Idaho with a $100 million budget surplus spanning fiscal years 2022 and 2023.

The bill is sponsored by Republican House Speaker Scott Bedke and Republican House Majority Leader Mike Moyle. Also, Republican Rep. Steven Harris and Republican Sen. Jim Rice are listed as sponsors.

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