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