Idaho Governor signs $253 million income tax cut

BOISE, Idaho (KIFI) - Idaho Governor Brad Little signed House Bill 40, the largest income tax cut in state history on Thursday, March 6, 2025.

According to a news release from the governor, most of the tax is achieved by reducing the income tax rate for individuals and businesses from 5.695% to 5.3%. It will also allow veterans to keep more of their military pensions.

The governor was joined by House and Senate leadership when he signed the bill.

“Idaho families and businesses need and deserve to keep more of their hard earned money. It is the right thing to do. Idaho’s continued strength comes from our focus on good government and the Idaho taxpayer. I appreciate my partners in the Legislature for sharing our goal of prioritizing tax relief while taking care of the needs of a growing state. As we continue to deliver historic tax relief, we must ensure our budget balances as the Idaho Constitution requires,” Governor Brad Little said.

“This is the people’s money, not ours in government. Today, we are delivering the single largest income tax cut in state history, and we are just getting started. Giving back the people’s money has always been and will remain a top priority of mine as Speaker,” House Speaker Mike Moyle said.

“Time and time again, Idaho’s state leaders have demonstrated that in times of prosperity we will do the right thing and give the people back more of what they earned. Today’s tax cut benefits not just the families that need it but our valued military veterans who have sacrificed so much for our state and our nation. I am proud to work with my fellow legislators and the Governor to arrive at this historic moment,” Senate Pro Tem Kelly Anthon said.

The Idaho Senate passed the bill on Tuesday, March 4, 2025, a projected $253 million tax cut, in addition to exemptions for military pensions and the removal of capital gains on bullion.

House Bill 40 passed the Senate by a 27-8 vote and now moves to Governor Brad Little's desk for final approval.

"Money that will stay in Idahoans' pockets"

The bill's sponsor, (R) Sen. Doug Ricks of Rexburg, said HB 40 would allow Idahoans to keep more of their hard-earned money.

"All of us have witnessed and understood in the last few years, when there's been stimulus dollars given to individuals, taxpayers, they spend that, and that stimulates the economy," Sen. Ricks told members of the Senate. "And in our times, we know our families, especially with children, are getting hit hard at the grocery store."

"HB-40 betrays working families"

Discussion surrounding the bill lasted well over an hour. Much of the debate centered around the climate of economic uncertainty as Trump administration and retaliatory tariffs went into effect Tuesday.

Senate Minority Leader Melissa Wintrow (D) argued that HB 40 would only benefit wealthy Idahoans, shifting the tax burden to working families. According to a report by the Idaho Center for Fiscal Policy, working families with a household income between $55,600 and $91,800 would only save around $127 on average.

"I think this tax bill is not only irresponsible, it's regressive. It betrays working families," Sen. Wintrow told the assembly. "Now, I don't know the last time you went to the grocery, but I could barely get out with $127...This doesn't help working families. In fact, it creates a larger gap between the haves and the have nots."

Sen. Wintrow referenced a report released earlier this week by the Division of Financial Management, estimating that the state is nearly $57 million behind predicted revenues for the fiscal year. Wintrow argued that the conservative thing to do would be not to cut the revenue that funds "the very services Idahoans need."

Republican Senators Jim Guthrie and Jim Woodward joined Democratic Senators in opposing the bill.