How much is your rebate? New Idaho law will give $600 million in income tax cuts

BOISE (Idaho Statesman) — Eligible Idahoans should expect income tax rebates later this year, now that lawmakers approved ongoing and one-time tax cuts for the second year in a row. Republican lawmakers said it’s the largest tax cut in the state’s history.

The Idaho Legislature approved a controversial bill to provide $600 million in income tax cuts and rebates, with the state’s highest earners receiving the largest cuts.

House Bill 436 reduces the top individual income tax bracket and corporate tax rate from 6.5% to 6%. That’s after lawmakers last year dropped the tax rate down from 6.925%.

The bill — which is expected to get final approval from Gov. Brad Little — also provides $350 million in one-time rebates, which total either 12% of someone’s 2020 income taxes or $75 per taxpayer and dependent, whichever is greater.

Under the new bill, Idaho will go from five to four tax brackets:

• Individuals whose taxable income is less than $1,000 will be taxed 1%;
• individuals whose taxable income is between $1,000 and $3,000 will be taxed $10, plus 3% of the amount over $1,000;
• individuals whose taxable income is between $3,000 and $5,000 will be taxed $70, plus 4.5% of the amount over $3,000;
• and individuals whose taxable income is more than $5,000 will be taxed $160, plus 6% of the amount over $5,000.

“This money belongs to the people who work here and live here, and they should have it back in their pocket,” said Sen. Steve Vick, a Dalton Gardens Republican.

WHO QUALIFIES FOR A REBATE?

The individual rebates will be available to those who were full-year Idaho residents in 2020 and 2021. They also needed to have filed income tax returns or filed for a grocery tax credit during that time.

Residents can still file their individual income tax returns. Those who weren’t required to file a tax return could also still file a grocery credit refund through the Income Tax Hub on tax.idaho.gov. The grocery credit on average is $100 per person, $120 for seniors.

HOW MUCH MONEY SHOULD YOU EXPECT?

Overall, Idahoans that made more money will receive larger rebates and cuts. Specifically, the rebate will amount to 12% of their 2020 income tax bill. Idaho taxpayers can calculate their rebates by looking at the income tax they paid in 2020 — on last year’s state tax form 40, line 20 — and multiply that number by 0.12.

Single-filing taxpayers who make $25,396 or less annually will receive the minimum — a $75 rebate and about a $38 ongoing tax cut. A family of four who makes $68,776 or less annually will receive $300, or four $75 rebates, and an ongoing tax cut of about $139.

The median annual income in Idaho is $55,785, according to data from the U.S. Census Bureau. That income level would see a $328 rebate and about a $113 ongoing tax cut, assuming the individual filed as single.

A single filer who made $1 million in 2020 would qualify for an $8,175 rebate and about a $4,834 ongoing tax cut.

A family of two adult workers with two children that makes $110,000 per year would see a rebate of $643 and about a $345 ongoing tax cut. A family of four with a $50,000 income would receive the minimum $300 rebate for a family that size and about a $45 ongoing tax cut.

These numbers are based on families that have the same taxable income for both 2020 and 2021 and did not take charitable deductions — which would result in lower rebates.

WHEN ARE THE REBATES COMING?

The Idaho State Tax Commission was not able to provide immediate information about when residents should expect their checks in the mail Tuesday. In 2021, state officials began to process rebates in August.

Residents can now file their taxes for 2021 until April 18. Questions related to filing this year’s taxes can be directed to the Internal Revenue Service’s website.

Idahoans who don’t need their rebate can donate them through the Idaho State Tax Commission, state funds for public schools, transportation or parks and recreation.

Bryan Clark contributed to this report.