Idaho Tax Changes
/We are living in an interesting time. Everyday your inbox, phone, TV, and any other media device you use is inundated with information about a virus named after a beer.
While all of that is going on it is easy to forget that there are other things going on in the world. Thankfully there are people paying attention to issues going on in our state. The Associated Taxpayers of Idaho put together a great newsletter to summarize what passed and didn’t pass in regards to taxes during this legislative session.
I’ve picked a couple that are interesting to me that impact real estate, cities, employers/employees, and even Cows and Chickens (kind of).
Here are some things you may have missed:
I don’t sell houses, but I like this piece of legislation that passed on March 24th making it so first time home buyers can establish a First-Time Homebuyer Savings Account. The purpose of this legislation is to establish First-time Homebuyer Savings Accounts. Similar to existing Idaho tax-advantaged savings accounts for healthcare and education. Idaho's First-time Homebuyer Savings Accounts would encourage individuals to save for their first home, including down payment on a home, or other eligible home costs associated with closing on their first home in Idaho. The allowable tax deduction for an individual account holder is $15,000 per year, while the allowable tax deduction for a married couple is $30,000 per year. The proposed legislation mirrors existing Idaho code for reporting and depository related matters for other tax-advantaged savings accounts in Idaho.
If I’m reading this one correctly it is retroactive to January 1, 2020. So if you purchased your first home earlier this year you may want to see if this can still apply for you.
https://legislature.idaho.gov/sessioninfo/2020/legislation/H0589/
Another piece of legislation I like is great for employers and employees.
The Income Tax Credit, College Savings – Idaho College Savings Program helps families to save for higher education and enables residents to further educational opportunities and pursue professional goals. The purpose of this bill is to provide an incentive for employers to help their employees enhance educational savings goals by contributing directly to the employee's qualified state tuition program accounts administered by IDeal. The bill provides employers a tax credit for contributing to an employee's individual IDeal – Idaho 529 College Savings Program account. The tax credit is 20% of the total employer's contribution with a maximum of $500 tax credit per employee, per taxable year. If you are an employer this is a great one to look into to provide extra value to your employees and help with attraction and retention.
This one receives the award for the funniest law change, while also equalizing how sales tax is distributed to Idaho cities:
The purpose of this legislation is to correct the inequities that exist with regards to how much each city receives from the sales tax distribution formula. The current formula for determining how much each city receives is partially based on the antiquated system of historical calculations based on the now non-existent personal property tax assessed to every Idaho citizen which included among other things, the number of pigs, chickens, cows, silverware and other personal items. The current system creates additional inequities because it relies on property values. This has created a situation where some cities receive ten times the amount than other cities and counties receive when compared to how much they would receive if calculated based solely on population.
This legislation establishes a new base amount using the previous year's distribution to each city. If sales tax collections increase, the first 1% of the increase is divided amongst all of the cities. If the state collects more than a 1% revenue increase than the previous year, the excess funds are only distributed to cities that receive less than their respective counterparts based on per capita calculation.
Hoping that the Governor signs off on this one; it could mean more jobs and many large scale data centers coming to Idaho to take advantage of our relatively inexpensive electricity. Taxation, data centers The purpose of this legislation is to encourage the construction and location of large-scale data centers in Idaho. The landscape for attracting data centers is extremely competitive across the United States. At least 30 states offer a sales tax exemption for server equipment. It is highly unlikely that a large-scale data center will locate in Idaho – or any state – without a sales tax exemption. This legislation would allow a sales and use tax exemption to data centers that commit to a capital expenditure of not less than two hundred and fifty million dollars($250,000,000) within five years of commencement of construction and will create no less than thirty jobs within two years of commencing operations. If a data center fails to meet these two requirements, any sales and use tax exempted shall be repaid. This legislation also clarifies that data center server equipment is not included in the definition of "new construction" for property tax purposes. Data centers significantly add to the property tax base wherever they are built, and create jobs paying above the average local wage.
