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House Bill 58 — Income tax

House Bill 58 — Income tax

Parrish Miller
February 4, 2021

Bill Description: House Bill 58 is the annual conformity bill that updates Idaho's definition of "Internal Revenue Code" to refer to the federal internal revenue code as it existed on Jan. 1, 2021.

Rating: +1

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 58 amends Section 63-3004, Idaho Code, to say, "The term 'Internal Revenue Code' means the Internal Revenue Code, as amended, and in effect on the first day of January 2021, except that Internal Revenue Code section 461(1) is applied as in effect on January 1, 2020."

Because the federal internal revenue code includes a number of measures designed to provide tax relief, conforming to this code will save Idahoans millions on their state income taxes.


Analyst Note: House Bill 58 is different from the typical conformity bill because it contains an exception. That exception applies to part of the Tax Cuts and Jobs Act of 2017 that relaxed the limitation on noncorproate losses. Congress removed the limitations for the 2018 through the 2020 tax years. Were Idaho to conform to this change, it would save Idahoans between $24 and $53 million. 

The fact that Idaho is choosing not to conform to a specific provision that would benefit Idahoans shows that our state does have a choice regarding conformity. This means that when, in future years, we are told that Idaho must conform to some change in federal law that will increase state income taxes in Idaho, we will have definitive proof that such conformity is optional.

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