Bill Description: House Bill 40 would reduce Idaho's individual and corporate income tax rate; expand a state income tax exemption for military pensions, and remove capital gains and losses for precious metals.

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Does it directly or indirectly create or increase any taxes, fees, or other assessments? Conversely, does it eliminate or reduce any taxes, fees, or other assessments?

House Bill 40 would amend Section 63-3024, Idaho Code, to reduce the state's individual income tax rate from 5.695% to 5.3%. This reduction of 0.395% would result in an annual savings of approximately $296 for a family with a taxable household income of $75,000.

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House Bill 40 would amend Section 63-3025, Idaho Code, to reduce the state's corporate income tax rate from 5.695% to 5.3%.

The bill's fiscal note projects the combined tax rate reduction for individuals and businesses will result in approximately a $240 million reduction in annual tax collections.

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House Bill 40 would amend Section 63-3022, Idaho Code, to remove from state income tax calculation "the amount of net capital gains or losses that meets the definition of precious metal bullion or monetized bullion under section 63-3622V, Idaho Code, included in the taxpayer's federal adjusted gross income."

The bill's fiscal note projects this change will result in approximately a $1 million reduction in annual tax collections.

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Does it increase government redistribution of wealth? Examples include the use of tax policy or other incentives to reward specific interest groups, businesses, politicians, or government employees with special favors or perks; transfer payments; and hiring additional government employees. Conversely, does it decrease government redistribution of wealth?

House Bill 40 would amend Section 63-3022A, Idaho Code, to expand Idaho's income tax exemption on U.S. military pension income to include any veteran, regardless of age or disability, so long as those under age 62 are employed and earning enough income to owe federal taxes. 

The bill's fiscal note projects this change will result in approximately a $12 million reduction in annual tax collections.

Reducing taxes is positive, but special carve-outs in the tax code that benefit or are available only to some people are problematic because they are discriminatory and can be redistributive.

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