Idaho Bills
7 bills · 2021 Regular Session
Amends existing law to revise provisions regarding the Internal Revenue Code.
This bill relates to income taxes. It is the annual bill to update references to the Internal Revenue Code (IRC). The bill conforms the Idaho income tax code to changes made to the IRC that affect the 2020 taxable year. The Idaho income tax code uses federal taxable income as a starting point for both businesses and individuals. Our tax forms use federal adjusted gross income as a starting point. Idaho uses a static conformity to a specific date, currently January 1, 2020. This bill updates Idaho Code section 63-3004, to January 1, 2021.
32 – 0
Adds to existing law to provide for a rebuttable presumption regarding evidence of expenditures.
35 – 0
Amends existing law to revise provisions regarding income tax rates and the Tax Relief Fund and to provide for a onetime income tax rebate.
This 2021 Tax Relief bill reduces all income tax brackets, setting the top individual and corporate tax bracket to 6.5% retroactive to January 1, 2021. This provides Idahoans with $169.4 million in ongoing tax relief. This bill also provides a one-time sales tax/income tax rebate, returning $220 million to Idaho taxpayers. A rebate check will be sent to 2020 personal income tax filers providing a minimum amount of $50 for each taxpayer and dependent or 9% of income taxes paid in 2019 whichever is greater.
58 – 12
Adds to existing law to establish provisions regarding the affected business entity tax.
This bill relates to federal income tax deductions for state and local taxes (SALT). Currently there is a $10,000 limitation on the federal deduction for SALT. In 2020, the IRS released Notice 2020-75 approving the availability and functionality of a SALT limitation workaround for pass-through entities (PTEs). This bill provides a workaround in the Idaho Code for owners, partners, members, and shareholders in partnerships, LLCs and S corporations in PTEs by allowing the PTE to elect to pay Idaho tax at the PTE level. This bill declares an emergency providing for retroactive application to January 1, 2021 for tax reporting purposes.
Amends existing law to revise provisions regarding the adjustable basis of depreciable property.
Bonusdepreciationisaccelerateddepreciationthatisallowedasadeductionforfederalincometaxpurposesbut is not allowed as a deduction for state income tax purposes. Accordingly, because federal taxable income is the starting point for calculating Idaho taxable income, the bonus depreciation taken as a deduction on the federal return is added back for Idaho income tax purposes. However, there are situations where a taxpayer cannot use the bonus depreciation on its federal return because of passive loss or similar limitations. In those situations, the Tax Commission has interpreted the law to require the add-back of the bonus depreciation even though that depreciation did not result in a current deduction at the federal level. That interpretation of the current statute creates what is known as “phantom income” and causes a tax to be due on income that is not in fact received by thetaxpayerandtoreverseadeductionthatthetaxpayerdidnotinfactreceive. Thecurrentstatutealsorequires a taxpayer’s basis in an asset for Idaho income tax purposes to be the same as for federal income tax purposes. This causes a taxpayer’s basis to be reduced by the amount of “extra” bonus depreciation that is not recognized in Idaho. When an asset is sold before it is fully depreciated this can result in a higher than appropriate capital gain since the taxpayer is forced to reduce its basis in the asset by an amount of “extra” depreciation that is not allowed in Idaho. This is another example of “phantom income” – an amount that is included in taxable income even though it did not result in any economic gain to the taxpayer. This legislation remedies these unintended outcomes by providing that Idaho taxable income would not include the bonus depreciation add-back where that depreciation could not be used currently on the federal return, and by permitting a taxpayer’s basis in an asset for state income tax purposes to be reduced only by that amount of depreciation that is actually allowed as a deduction
35 – 0
Adds to existing law to provide state procedures for certain partnerships to report adjustments to federal taxable income.
This bill relates to income tax. This is to allow Idaho to comply with changes in the Internal Revenue Code that were made as part of the Bipartisan Budget Act of 2015, Public Law 114-74, as amended. Congress created a new efficient method option to avoid the time and expense of auditing large partnerships with 100 or more partners. If the IRS determines that the partnership has calculated their tax liability incorrectly in past years, they notify the partnership of the estimated liability. The partnership is given the option of paying a settlement amount based on that estimate and avoiding the cost and time of conducting the audit. This also saves the partnership the cost and effort of amending the prior year tax returns causing their partners to have to amend their tax returns. Idaho's income tax laws are based on federal taxable income and taxpayers are required to report changes in federaltaxableincome. Thisnewprocedureisn'ttechnicallyachangeinfederaltaxableincomebutnotadopting these changes would leave Idaho with no clear authority to collect the tax liability of large partnerships doing business in Idaho and their resident partners. This bill creates a parallel state option for partnerships to address the state tax liability in the case of a proposed change without the cost and time of the full traditional audit.
Amends existing law to revise provisions regarding Idaho taxable income.
This bill makes the Rebound Idaho Small Business Grants issued during 2020 nontaxable for state income tax purposes. This bill makes forgiven Paycheck Protection Program loans issued during 2020 nontaxable for state income tax purposes.