Committee sends major income tax relief bill to House floor after split debate

The House Revenue and Taxation Committee on Jan. 30 voted 12‑2‑1 to send House Bill 40 to the House floor with a due pass recommendation after a day of testimony and floor debate. Speaker Mike Moyle (R‑District 10) presented the bill as the first of three tax relief proposals this session and said it would reduce income tax rates, exempt more military retirement benefits from taxation and repeal capital gains tax treatment on certain monetized metals.

Moyle told the committee the measure would lower Idaho’s income tax rate from 5.695% to 5.3% and said the bill would exempt disabled military retirement benefits at younger ages and extend tax relief to future military retirees. He also described removing capital gains tax on gold and similar metals, saying the market is difficult to track and the change would support Idaho’s resource and commercial activity. “The only reason I ran for the legislature is to cut taxes,” Moyle said during his presentation.

The committee received three written remote testimonies read into the record: Yori De La Rosa, vice president of the Idaho Veterans Chamber of Commerce, urged support and said exempting military pensions would attract experienced workers; Damon Durace of Coeur d’Alene, commander of American Legion Post 14, also supported the bill; and Zach Wilson (District 20) opposed two parts of HB 40, citing risks to general fund revenues and concerns about the capital‑gains carve‑out.

Fred Birnbaum of the Idaho Freedom Foundation gave in‑person testimony arguing that tax policy is dynamic and that past tax cuts have not starved state revenue. He provided state fiscal data and said the projected ending cash balance left room for additional tax relief.

Representative John Birch offered a substitute motion to hold HB 40 at the call of the chair, saying he supported the military retirement exemption if it were a standalone bill but that the larger package required more analysis of long‑term needs for roads, schools and other services. “I support the portion of this bill that pertains to the military…and I would gladly cosponsor that if it was a standalone bill,” Birch said. The substitute to hold failed in a voice vote, and the committee then took a roll‑call vote on the original motion to send the bill to the floor.

Roll‑call tally: the clerk recorded 12 votes in favor and 2 against, with one member absent and excused; the transcript records Representative Gannon and Representative Birch as the two no votes. Committee leadership announced the bill will be sent to the House floor with a due pass recommendation; the transcript lists Representative Monks as the floor sponsor and identifies Speaker Mike Moyle as the bill’s presenter to committee.

What proponents said: Supporters framed the bill as both appreciation for veterans and economic policy to attract workers, citing workforce development gains and past revenue growth despite prior tax reductions. Opponents warned of long‑term revenue tradeoffs, questioned the distributional effects of income tax relief and urged separating the military exemption from other changes.

Next steps: House Bill 40 will move to the full House for further debate and possible amendment; committee sponsors indicated fiscal, distributional and implementation questions will be available for floor consideration.