Legislative session sees changes in education, taxes

The first regular session of the 68th Idaho Legislature adjourned April 5. The session spanned 89 days, fairly typical in length, although 15 days beyond the target completion date. There were significant policy changes in education and taxes, as well as changes in general government regarding everything from business licenses to specialty license plates. 

Tax laws were changed for income tax, grocery sales tax, property taxes, and small sellers of goods. The income tax rate for Idaho in 2025 is 5.3%, down from 5.695% last year. More substantially, the income tax rate is down from 7.4% since 2017. The difference between 2017 and 2025 is about $700 million annually of taxes not being collected from all of us, but also not available for roads, schools, and other infrastructure.  

I have been involved in three income tax rate reductions over the five years I’ve served in the Legislature. I voted for two of them. I did not vote for House Bill 40, the income tax reduction this year. When I am waiting to pull into the steady stream of traffic on Highway 95, I am reminded why. Idaho continues to add about 50,000 people per year to the population. We can invest in infrastructure, or we can watch our quality of life degrade. I have never asked for a tax rate increase. I simply think we should leave the percentage where it is. Increased economic activity brings in more revenue to match the demand on the system.   

H40 also created a shortage of money in other areas of the budget. We trimmed back the transportation budget by $35 million. We did not put money in the general rainy-day savings account. We did not put money in the Public Education Stabilization Fund. We did not put money in the wildfire account. In fact, we drew down the wildfire account balance because we paid only two-thirds of the invoice from last fire season with cash on hand.   

Finally, H40 also included a capital gains tax exemption that primarily benefits just one political donor. I think that is dirty politics and is bad for Idaho. 

Moving on, the grocery sales tax credit will now be $155 per person annually. At this rate, a family of four can purchase $10,333 of groceries in a year without tax. Groceries do not include many items we purchase at the grocery store such as cleaning supplies, greeting cards, or shampoo. 

A commitment to ongoing property tax relief was made this year with House Bill 304. The bill provides $50 million annually to the School Facilities Fund and $50 million to the Homeowner Property Tax Relief account. Both programs provide property tax relief, but the money comes from sales tax and income tax. In my mind, it is more of a redistribution than actual relief for any Idahoan who is working in Idaho, buying products in Idaho, and owns a home in Idaho. 

Part tax policy and part education policy, House Bill 93 made a significant change to education funding. The bill allows a $5,000 tax credit per child for private school tuition expenses. The program has a $50 million cap on the total cost, which means just under 10,000 Idaho students can benefit from the program. However, this is the only tax credit I am aware of that has a limit on the funds available. For any other tax credit, if you are eligible, you receive the credit when you file your tax return. For this reason, I expect the cost to grow beyond the $50 million cap, either through a law change or a lawsuit. 

The Empowering Parents Program, a $1,000 per-child educational expense grant program which originated during the pandemic, will be phased out over the next three years. I expect there will be a push to move the $30 million from Empowering Parents into the H93 tax credit program. 

Below is a list of new laws from the legislative session that you may find of interest. All these recently passed bills can be viewed at https://legislature.idaho.gov/sessioninfo. 

H134 — Requires insurers provide supplemental breast cancer screening coverage for persons of heightened risk  

S1208 — Provides for an additional district judge in the 1st Judicial District 

S1164 — Building permits shall be acknowledged as complete applications within 10 business days of submission.   

Idaho is still the best place to live that I can imagine. With the legislative session complete, I will be back to work in both Bonner and Boundary County. We will continue to push the timeline on repairs at Albeni Falls Dam. I will also be co-chairing a legislative interim committee on housing affordability in Idaho. I hope to hold one meeting in Sandpoint. Later this summer, we will hold a community brainstorming session on how to reinvent public education, hosted by the Idaho State Senate Education Committee chair. 

Idaho Sen. Jim Woodward represents Bonner and Boundary counties in District 1. He can be reached at jwoodward@senate.idaho.gov.