Bill to boost Idaho grocery sales tax credit advances

BOISE — A bill to increase by $20 the amount Idaho residents can recover on taxes paid on food through the grocery sales tax credit is headed to the full House on Monday.

The House Revenue and Taxation Committee voted to approve the bill that boosts the annual maximum credit people can receive from $100 to $120 for people under 65, and from $120 to $140 for those 65 and over. The maximum credit amount hasn’t been changed since 2015.

“We have seen inflation, certainly since then and particularly in the last year,” said Republican Sen. Steve Vick, the bill’s sponsor.

He said the current $100 tax credit covers sales taxes on about $139 spent monthly per person on groceries.

If passed, the bill would cut about $32 million from state revenues. That would be replaced using money from the Tax Relief Fund, which collects sales taxes on online purchases.

Vick said the Tax Relief Fund doesn’t currently have enough money to cover the grocery sales tax credit until 2023, meaning taxpayers will have to wait until 2024 to claim the increased credit when filling out their taxes.

“Yeah, this is $20,” said Republican Rep. Tammy Nichols. “I guess you can call that some tax relief. I still call it breadcrumbs. I still don’t see good tax relief legislation coming forward and I’m losing hope in regards to that effort. I feel with the inflation costs going on with food in conjunction with everything else that’s going up in price that we can do better than this and give Idahoans their money back.”

She voted to move the bill to the full House but reserved her right to change her vote there.

In 2020, 87% of Idaho residents used the grocery sales tax credit, said Miguel Legarreta, president of the Associated Taxpayers of Idaho, a nonpartisan, not-for-profit organization formed in 1946 to work on behalf of Idaho’s taxpayers.

Legarreta told lawmakers that another 7% received help from the state’s food stamp program, which is named the Supplemental Nutrition Assistance Program. That means that overall about 94% of Idaho residents received some sort of food benefit over the last several years, he said.

People who don’t get the food benefit include prison inmates, people not in the country legally and tourists.

“I think this is a good way to go about getting money for groceries back in the hands of taxpayers because inflationary pressures do cause that issue,” Legarreta said. “In looking at this bill, it certainly is a way and a simple and a transparent, fair manner keeping our state revenue stable and get money back in the hands of taxpayers.”

Repealing the grocery sales tax and also doing away with the tax credit has been a hot topic, with many lawmakers arguing it harms low-income earners the most.

Legarreta noted that in some scenarios, the grocery sales tax credit provides more benefit to some families than removing the grocery sales tax.

A family of four with $100,000 in annual income would be better off with the credit, he said. That includes food bought in Idaho restaurants.

Republican House Speaker Scott Bedke has said doing away with the grocery sales tax would cost the state about $140 million.