Idaho Updates IRC Conformity, Passes Other Reform

Idaho Governor C.L. “Butch” Otter has signed significant tax reform legislation.

Idaho and IRC Conformity

The legislation updates the state’s Internal Revenue Code (IRC) conformity date to:

  • December 21, 2017, for tax year 2017;
  • December 31, 2017, applicable to IRC Sec. 965 (repatriation tax provisions) and IRC Sec. 213 (personal income tax deduction for medical expenses) for tax year 2017; and
  • January 1, 2018, for tax years beginning after 2017.

Tax Rate Decreases

A 0.475% rate reduction is enacted for:

  • all personal income tax brackets; and
  • the state corporate income tax.

Corporate Tax Addbacks

The legislation also requires a corporate income tax addback for:

  • amounts deducted under IRC Sec. 965 (repatriation tax provisions);
  • amounts deducted under IRC Sec. 245A (participation exemption deduction for foreign-source portion of dividends);
  • amounts deducted under IRC Sec. 250 (foreign-derived intangible income and global intangible low-taxed income deduction); and
  • other special deductions.

Addback for Net Operating Losses

Taxpayers are now required to add back any amount limited by IRC Sec. 461 when determining the amount of a net operating loss.

Nonrefundable Child Tax Credit

The legislation creates a nonrefundable child tax credit of $130 dollars per child for tax years:

  • after 2017; and
  • before 2026.

However, legislation (H.B. 675) has been introduced in the Idaho House of Representatives to increase the credit to $205 per child.

H.B. 463), Laws 2018, retroactively effective to January 1, 2018; H.B. 675, introduced in the Idaho House of Representatives on March 9, 2018

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All stories by: CCHTaxGroup