Mike Moyle proposes reducing income tax

BOISE — Idaho lawmakers will consider significantly reducing income taxes this year, resulting in an anticipated $253 million reduction in revenue — with more tax cuts on the way.

House Speaker Mike Moyle, R-Star, presented the proposed bill Thursday to reduce the flat individual and corporate income tax rate from 5.695% to 5.3%, as well as expand income tax exemptions to U.S. military pension income for disabled veterans younger than age 62 who are employed, and all veterans age 62-64. It also removes capital gains taxes on metal bullion.

Moyle said once the subsequent tax bills are proposed, which will include cuts to sales and property taxes, then he expects the total proposed revenue reduction to total close to $400 million.

“The last couple of years, if you’ve watched the state of Idaho, we’ve been trying to do all we can to give money back,” Moyle said.

The House Revenue and Taxation Committee voted to introduce the bill, clearing its way to come back for a public hearing. Only Rep. Steve Berch, D-Boise, voted against its introduction, saying he wanted to see a bigger picture analysis on the overall impact of reducing the state’s revenue so much.

The income and corporate income tax reduction would total about a $240 million reduction in the state’s general fund revenue, the expanded exemptions for military pensions would reduce revenue by about $12 million, and the mining metals capital gains tax elimination would be about $1 million less.

“We are a mineral-rich state,” Moyle said. “I think it is imperative upon us to encourage that in the state of Idaho.”

He said of the exemption on income tax for military pensions that if younger veterans choose to continue to work then their military pension won’t be taxed.

“If you’re younger and retired, we want to encourage you to come here and work,” Moyle said. “We want to take the assets, the skills you learned in the military and apply them to the state of Idaho.”

Berch said that while “there’s some things” he liked, such as the military pension exemption, he did not want to support it without understanding the broader budget implications.

“We can talk about how much money we want to take off the table, but for us to make a decision, I’d like to understand what our fiscal obligations are to know if we can afford this,” Berch said. “Until I see that bigger picture, it’s just hard to make a decision to support something when you’re only looking at one side of the ledger.”

Rep. John Gannon, D-Boise, voted in favor of introducing the bill but said he had “serious questions” as to whether the Legislature would also be able to repeal the grocery tax if it were implemented.

In 2022, the Idaho Legislature passed the largest tax cut in state history, totaling more than $600 million. The cut included $350 in one-time rebates and $250 million in permanent income tax reductions for people and businesses. The Legislature in 2022 also met in a one-day special session and set a flat rate for income and corporate income tax at 5.8%.

Last year, a school facilities funding bill also included a $60 million reduction in corporate and income tax, setting the new rate at 5.695% for both. Moyle’s bill presented Thursday further reduces the rate to 5.3%.

Gov. Brad Little in his State of the State address called for $100 million in tax cuts this session. Moyle said Thursday that he appreciated “the good gentleman on the second floor offering $100 million, but I think together, we can do more.”

Guido covers Idaho politics for the Lewiston Tribune, Moscow-Pullman Daily News and Idaho Press of Nampa. She may be contacted at lguido@idahopress.com and can be found on Twitter @EyeOnBoiseGuido.