In a time of escalating costs, Idaho taxpayers will receive welcome relief from recent changes to Idaho’s state’s tax laws.
Income Tax Relief- HB No. 40
The Legislature recently enacted the largest income tax cut in state history for individuals, trusts, estates and corporations (except S corporations) from 5.695% to 5.3% for tax year 2025.
Sales and Use Tax Relief for “Small Sellers”- HB No. 144
Under this bill, “small sellers” can qualify for state sales and use tax exemption.
· The exemption applies only to “small sellers,” which are defined as Idaho residents whose cumulative gross receipts do not exceed $5,000 in the current or previous calendar year.
· The exemption does not apply to partnerships, limited liability corporations, and corporations.
· The exemption does not apply to the sale of motor vehicles, trailers, off-highway vehicles, or motorcycles that are intended for off-road use, aircrafts, snowmobiles, alcohol, certain vessels and tobacco.
· A small seller cannot permanently use, maintain or occupy an office, place of distribution, storage place or other place of business to maintain a stock of goods with the anticipation of exceeding gross receipts of $5,000.
· A small seller should file an application with the state tax commission for a permit before the seller reaches $5,000. If the small seller’s gross receipts do exceed the $5,000 limit, they have 30 days to file an application for a temporary seller’s permit with the state tax commission, and they must then begin collecting sales and use tax.
· The temporary permit will only be issued for the remaining calendar year, and the following year, the seller must apply for a seller’s permit.
While this exemption has many specific requirements, it helps provide relief to taxpayers who participate in small sales. This bill went into effect on July 1, 2025.
Property Tax Relief- HB 304
House Bill 304 provides $100 million in property tax relief to Idaho taxpayers. According to the bill, $50 million will be transferred from the state’s tax relief fund to the school district facilities fund to be used for renovating and constructing school facilities. The $50 million will reduce the property tax levy, providing significant property tax relief to Idaho taxpayers. The bill further provides that another $50 million will be transferred from the tax relief fund to the homeowner property tax relief account – a program designed to reduce property taxes on owner-occupied properties receiving the homestead property tax exemption. Idaho’s recent tax reform delivers relief to its residents through a combination of income, sales and property tax reduction. The historic reduction in income tax rate offers broad savings for individuals and businesses. Collectively, these changes signal a robust and multifaceted approach to ease the tax burden on Idahoans while strengthening the state’s economic foundation.
