Senate passes large income tax cut in 27-8 vote after extended debate

BOISE, Idaho — The Idaho Senate on March 4 passed House Bill 40, a three-part tax package that reduces the state income tax rate and adds targeted exemptions, by a vote of 27 in favor and 8 opposed.

“House Bill 40 has 3 main parts,” sponsor Senator Rex said in opening debate, describing what he called the “largest” income tax cut in state history: a cut that reduces the income tax rate from 5.695 percent to 5.3 percent, an exemption for military retirement income, and the removal of capital-gains taxation on certain bullion sales. The sponsor told the Senate the income-tax change is estimated to cost about $240 million annually and that the military pension exemption would cost roughly $12 million.

Why it matters: Supporters said the cut will put money back in taxpayers’ pockets and stimulate spending; opponents said the timing is risky given recent revenue softness and national economic uncertainty. The Senate’s…