Senate approves $240 million income tax cut; bill also exempts military pensions and removes capital-gains on bullion

BOISE, Idaho — The Idaho Senate on March 4 passed House Bill 40, a multi-part tax package that would reduce the state individual and corporate income tax rate, exempt certain military retirement pay from state income tax and remove capital-gains treatment for some bullion transactions. The Senate approved the bill 27–8.

The bill’s sponsor, identified on the floor as Senator Rex, opened debate saying, “House Bill 40 has 3 main parts,” and outlined the changes: a rate cut from 5.695% to 5.3%, an exemption for military pensions and retirement, and the removal of capital gains on certain bullion sales. He and other supporters described the largest component as a roughly $240 million annual income-tax reduction that they said would leave money in taxpayers’ pockets and stimulate consumer spending.

Supporters argued the cut would return $240 million to Idaho taxpayers and that the military-pension exemption (estimated cost $12 million) would support recruitment and retention of veterans. Opponents called the overall package ill-timed amid revenue uncertainty. Senator Sarah Wintrow sharply opposed the measure on the floor, calling it “probably the largest tax cut we’re gonna see in our history so far” and saying it was “the most irresponsible” course while state revenues showed signs of slowing.

Several senators pressed the point that the state has not finalized a new revenue projection for the coming fiscal year; critics warned that cutting recurring revenues before a finalized forecast could force future program cuts or layoffs if revenues drop. Senator Guthrie summarized his unease with a metaphor during debate: “the skids are greased, the train is on the track, the outcome is all but decided, yet I find myself standing in front of that train,” arguing for a smaller, phased approach or pairing cuts with other targeted relief.

Provisions and fiscal details cited on the floor and in committee handouts included: - Income tax: reduce the rate from 5.695% to 5.3% (estimated $240,000,000 annual reduction). - Military pensions: expand exemption for military retirement income (estimated $12,000,000 annual cost). - Bullion: remove capital-gains treatment on sales of certain gold and silver bullion (estimated roughly $1,000,000 annual effect). - Example impact: a cited “average spud family of 4” with $137,000 annual income would save about $389 under the proposal, per handout referenced on the floor.

During the roll call, the Senate approved the bill 27 in favor and 8 opposed. The final passage message recorded that the majority voted in the affirmative and the bill will be returned to the House for further action.

Votes at a glance (selected bills acted during the same floor session): - House Bill 40 — Passed Senate 27–8. Main provisions: income tax rate cut to 5.3%; military retirement exemption (~$12M); remove capital gains on some bullion (~$1M). (See article text for debate summary.) - Senate Bill 11-31 (Department of Insurance supplemental appropriation) — Passed Senate 23–11 with 1 absent. Additional dedicated funds and two FTEs for actuarial and compliance work were included. - Senate Bill 11-26 (self-storage lien/notice revisions) — Passed Senate 27–7 with 1 absent. Updates notification and disposal methods for defaulted self-storage units. - Senate Bill 11-16 (office of administrative hearings appropriation/charging model) — Passed Senate 34–1. Changes internal charging model so OAH charges agencies it serves. - House Bill 79 (community college tuition cap raised) — Passed Senate 26–9. Raises annual tuition cap and limits annual increases to 10%. - House Bills 8, 34, 53, 54, 31, 172 and others listed on the floor — Each passed the Senate (roll calls recorded; see transcripts for tallies; many passed on recorded 34–1 or similar votes where noted).

What the Senate did — and did not — decide - Decision: The Senate voted to pass House Bill 40 and several other measures during the March 4 floor session. The vote sends HB 40 back to the House. - Not decided here: final enactment depends on the House response and any conference process; appropriations and tax changes remain subject to final reconciliation before becoming law.

Context and next steps House Bill 40 now returns to the Idaho House for its next procedural steps; if enacted in this form it will change Idaho’s income-tax structure and exempt some military retirement pay. Multiple senators asked that revenue estimates and projections be clarified before further budget commitments are finalized; several members said they would monitor April and subsequent revenue collections and could seek adjustments in later sessions or via the budget process.

Funding and affected groups cited during debate included general state revenue impacts (the $240 million estimate), an estimated $12 million fiscal effect for military-pension exemptions, and small fiscal impacts related to bullion capital-gains treatment. Supporters said the reduction would leave more spending power with Idaho taxpayers; opponents warned the cut is regressive and risks underfunding state services if revenue falls.

Ending note: The bill’s sponsor and supporters framed the vote as a return of revenue to taxpayers; opponents framed it as a fiscal risk in uncertain economic conditions. The full House Bill 40 text and committee fiscal notes are available from the legislative record; the Senate transcript records the floor debate, roll call and the 27–8 passage.