Bill Analyses and Ratings
Bill Information: H0782 – Idaho Tax Rate Adjustment & Parental Choice Repeal
Bill Summary
House Bill 782 makes four substantive changes to Idaho tax law, effective retroactively to January 1, 2026. First, it raises the individual income tax rate from 5.3% to 5.325% for both single filers (on income over $2,500) and joint filers (on income over $5,000). Second, it sets the corporate income tax rate at 5.325% beginning January 1, 2026, continuing the historical pattern of annual rate adjustments codified in Section 63-3025.
Third, the bill makes the $205-per-qualifying-child tax credit permanent by removing the expiration language ‘and before January 1, 2026’ from Section 63-3029L. Without this change, the child tax credit would have lapsed at the start of 2026. Fourth, and most significantly in terms of policy impact, the bill repeals the Idaho Parental Choice Tax Credit (Section 63-3029N) entirely and directs the State Controller to transfer any unobligated funds remaining in the associated advance payment fund to the general fund by July 1, 2026, but no later than December 1, 2026.
The advance payment fund itself (Section 67-1230) is repealed effective January 1, 2027, giving time for the fund transfer to be completed. The bill carries an emergency declaration, making the tax rate changes and parental choice credit repeal effective immediately upon passage with retroactive application to January 1, 2026.
Overall Assessment
The most consequential change in this bill is the repeal of the Idaho Parental Choice Tax Credit, which eliminated a program designed to give families financial support for private and alternative schooling options. Simultaneously, the bill raises both individual and corporate income tax rates from 5.3% to 5.325%, increasing the tax burden on Idaho workers, families, and businesses. The one offsetting benefit is the permanent extension of the $205 child tax credit, which would have expired without this legislation, preserving modest tax relief for families with qualifying children.
Rating Breakdown
ARTICLE I. RESPONSIBILITY IN GOVERNMENT (-1)
Sections 1 and 2 increase both individual and corporate income tax rates from 5.3% to 5.325%, moving in the opposite direction of lower taxes. While the increase is small in percentage terms, it represents a tax increase on all Idaho income earners and businesses rather than the tax reduction or simplification that responsible fiscal governance favors.
ARTICLE II. CITIZEN INVOLVEMENT IN GOVERNMENT (0)
This bill addresses income tax rates and tax credit programs exclusively. It makes no changes to electoral processes, citizen participation mechanisms, primary election rules, or civic engagement structures.
ARTICLE III. EDUCATION (-1)
Section 4 repeals Section 63-3029N, the Idaho Parental Choice Tax Credit, which provided families with a tax credit to offset the cost of private school tuition and other educational alternatives. This directly eliminates a school choice mechanism, reducing parents' financial ability to select educational options outside the public school system and concentrating educational funding back toward the traditional public school structure.
ARTICLE IV. AGRICULTURE (0)
This bill makes no changes to agricultural policy, water rights for farming, commodity markets, or programs affecting family farms and ranching operations in Idaho.
ARTICLE V. WATER (0)
The bill's provisions are limited to income tax rates and tax credit programs. It makes no changes to water appropriation law, inter-basin transfers, dam operations, or Idaho's water sovereignty.
ARTICLE VI. NATURAL RESOURCES AND ENVIRONMENT (0)
This bill contains no provisions affecting natural resource management, environmental regulation, federal land policy, or forest health programs in Idaho.
ARTICLE VII. ENERGY (0)
The bill addresses income tax rates and education-related tax credits only. It makes no changes to energy policy, hydroelectric power, energy independence initiatives, or utility rate structures.
ARTICLE VIII. IDAHO NATIONAL LABORATORIES (0)
This bill contains no provisions related to the Idaho National Laboratory, nuclear energy research, or defense-related research and development programs.
ARTICLE IX. PRIVATE PROPERTY RIGHTS (0)
The bill modifies income tax rates and repeals a tax credit program. It makes no changes to eminent domain law, regulatory takings protections, or property development rights.
ARTICLE X. STATE AND FEDERAL LANDS (0)
This bill addresses income taxation and tax credits exclusively. It contains no provisions affecting federal land ownership in Idaho, state land management, or the transfer of federal lands to state control.
ARTICLE XI. WILDLIFE MANAGEMENT (0)
The bill makes no changes to fish and game management, hunting and fishing regulations, predator control programs, or wildlife conservation policy in Idaho.
ARTICLE XII. ECONOMY (-1)
Sections 1 and 2 raise both the individual income tax rate and the corporate income tax rate to 5.325%, increasing costs for Idaho businesses and reducing take-home pay for workers. Higher corporate taxes reduce the competitiveness of Idaho's business climate and place an additional burden on small businesses, which are a primary driver of Idaho's economy.
ARTICLE XIII. HEALTH AND WELFARE (0)
This bill addresses income tax rates and education-related tax credits. It makes no changes to healthcare delivery, insurance markets, Medicaid, or welfare program structures in Idaho.
ARTICLE XIV. AMERICAN FAMILY (0)
The bill produces competing effects on families: Section 3 permanently extends the $205-per-child tax credit, preserving meaningful tax relief for parents, while Section 4 repeals the Parental Choice Tax Credit, removing a tool that helped families exercise educational decision-making for their children. The permanent child tax credit extension and the parental choice credit repeal largely offset each other in terms of net impact on family economic welfare and parental rights in education.
ARTICLE XV. OLDER AMERICANS (0)
The bill's tax rate changes apply broadly to all income earners and do not contain provisions specifically targeting or exempting older Idahoans. No changes are made to retirement income treatment, senior services, or policies affecting older workers.
ARTICLE XVI. LAW AND ORDER WITH JUSTICE (0)
This bill addresses income tax rates and tax credit programs exclusively. It makes no changes to criminal justice, law enforcement funding, firearms laws, drug policy, or incarceration policy.
ARTICLE XVII. NATIONAL DEFENSE – SECURING THE BORDER (0)
The bill contains no provisions related to military readiness, veterans' benefits, border security, or immigration enforcement. Its scope is limited to state income tax rates and tax credits.
ARTICLE XVIII. ELECTION OF JUDGES AND IDAHO SUPREME COURT JUSTICES (0)
This bill makes no changes to judicial selection processes, the election of judges or Supreme Court justices, or constitutional interpretation standards in Idaho courts.
ARTICLE XIX. RELIGIOUS LIBERTY (0)
The bill addresses income tax rates and tax credit programs. It makes no changes to religious freedom protections, conscience clause provisions, or the free exercise of religion in Idaho.