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Idaho House approves $253 million income-tax cut, military-retirement exclusion and bullion capital-gains exemption
Summary
House Bill 40 passed the House on Feb. 3, 2025, lowering Idaho’s income-tax rate, exempting some military retirement income, and exempting capital gains on bullion; the bill passed 63-7 after extended debate over fiscal impacts and distributional effects.
BOISE, Idaho — The Idaho House approved House Bill 40 on Feb. 3, 2025, a package of tax changes the sponsor said would return roughly $253 million annually to Idaho taxpayers. The bill reduces the state individual income-tax rate from 5.695% to 5.3%, exempts certain military retirement income from state taxation, and removes capital-gains taxation on bullion such as gold and silver. The House approved the measure, 63-7.
Representative, District 22, the bill’s floor sponsor, said the measure will "put a whole lot more money back into the hands and the pockets of Idahoans, to the tune of more than $253,000,000." He described the measures as the largest income-tax cut in state history and said they would make Idaho more attractive to retirees and service members.
Opponents pressed fiscal and equity concerns. Representative, District 15 argued that the bill’s long-term revenue loss should be weighed against projected state needs, citing road, school maintenance and public-safety funding requirements: "You have to look at the other side of the ledger, not how much we're taking off the table… We have over $5 billion in ITD projects and over $1 billion in deferred school maintenance," the representative said on the floor.
Representative, District 18 criticized the distributional effects of the bill and cited analysis from the Idaho Center for Fiscal Policy that, she said, showed higher-income households would receive the largest share of the benefit: "Sixty-six percent of the total dollar tag on this is going to the top 20% of earners," she said, arguing the package would not direct the greatest relief to lower-income households who pay more regressive taxes such as grocery and sales taxes.
Supporters argued tax reductions spur economic growth and help families and small businesses. Members also emphasized separate provisions providing relief for military retirees, which several speakers said helps recruit and retain service members and veterans.
After nearly two hours of debate and multiple members’ statements, the House approved HB40. The measure’s title was approved and the bill will be transmitted to the Senate.
