BOISE, ID – An Idaho House of Representatives committee voted Monday to advance a bill that adopts nearly all of the tax cuts in the federal “One Big Beautiful Bill Act,” amid concerns over its hit to the state budget.

The House Revenue and Taxation Committee voted along party lines to send House Bill 559 to the floor, where it may be considered by the entire chamber. The public hearing lasted two hours, with the vast majority of the public testifying in opposition.

“This bill is tax cuts for the people of Idaho,” bill sponsor Rep. Jeff Ehlers, R-Meridian, said Monday. “This goes back to the Trump cuts that he made as part of the One Big Beautiful Bill.”

Each year, the Idaho Legislature passes a tax conformity bill, which aligns Idaho’s tax code with the federal tax code, and typically ensures the definitions of taxable income match. This year, conformity to the tax deductions included in the massive federal tax-and-spending bill may cost the state an estimated $155 million in the current fiscal year.

Because of the sweeping changes this year, and the fact that House Bill 559 would apply to residents’ 2025 taxes — there is uncertainty over the scale of the impact in an already tight budget year.

Ehlers said he felt his $155 million estimate was a “reasonable number.”

He noted that the individual tax benefits included in the federal bill only last four years, so he thought it was important to apply the cuts retroactively to 2025. Idaho Gov. Brad Little’s budget proposal this year would have begun conforming in the next fiscal year.

Opponents of bill worry over cutting costs to pay for it

Of the 24 people who spoke at Monday’s hearing, 21 opposed the bill. All of the opponents expressed concern over its price tag and the effect on programs such as Medicaid and K-12 public schools. Committee Chair Rep. David Cannon, R-Blackfoot, said he’d received about 200 emailed testimonies as well, most of which were in opposition.

Last week, the leaders of the state budget-writing committee wrote to agency heads to consider additional 1% and 2% budget cuts in the current fiscal year, which ends June 30, and the next fiscal year. Medicaid and public schools had originally been protected from the broad budget cuts, but a memo sent Wednesday targeted both programs for potential reductions.

Elinor Chehey, on behalf of a group called United Women in Faith, argued that the result of the income tax cuts included in House Bill 559 would be a shift to property taxes.

“If you have to reduce the public school funding to balance the state budget, the schools will be asking for more supplemental levies,” Chehey said. “… if Medicaid expansion is greatly reduced or eliminated, we will need to go back to the Idaho Catastrophic Health Fund that covered medical expenses for the working poor before 2020.”

She noted that before Medicaid expansion had been approved via ballot initiative in 2018, the state helped counties pay for indigent hospital care through a now defunct fund called the Catastrophic Health Fund. The fund was eliminated upon implementation of expansion in 2020.

Middleton resident Alicia Mondor said that her 6-year-old son who has a rare and terminal muscular dystrophy condition relies on benefits provided through Medicaid. “There are thousands of kids and parents just like me who are willing to fight for their kids, and we are very upset that Idaho seems to be wanting to give tax breaks to corporations rather than taking care of their vulnerable,” Mondor said.

Supporters would rather Idaho fully conform to all the tax write-offs in the OBBA

Those who spoke in favor of the bill said they supported conforming to the tax changes, but would rather have adopted all the federal changes.

Ehlers’ bill takes a phased approach to the deduction on research and experimentation, also called research and development. Under the Big Beautiful Bill, those full deductions could be retroactive to 2022 expenses. Under HB 559, the expense could be fully deducted starting in 2025. For expenses made in 2022 to 2024, the expenses could be amortized, or spread out over time.

Ron Nate, president of the conservative think tank, the Idaho Freedom Foundation, told committee members he supported the bill, but would’ve liked to see it go further.

“The drawback I see with this bill is it does pick winners and losers on the corporate side,” Nate said. “We should conform fully on the corporate side, as well and for both years also.”

Nate also urged lawmakers to do further tax cuts this year by eliminating either income taxes or property taxes completely.

House Majority Leader Jason Monks, R-Meridian, countered Nate, saying, “So Idaho is not picking winners and losers. We’re just saying that we’re doing it differently than the federal.”

Mark Wynn, representing the frozen potato and fry company Lamb Weston, spoke in favor of the bill but also said its research and experimental provisions “attack and target companies that innovate and invest in Idaho.”

Committee Republicans express some concerns, but all vote in favor

Rep. Britt Raybould, R-Rexburg, asked questions about the bill’s impact on the current fiscal year budget and regarding the potential need for further cuts.

Rep. Rick Cheatum, R-Pocatello, said he had “great concern,” that experts with the Associated Taxpayers of Idaho had requested what are called trailer bills — which are passed after a main bill — to fix the timing concerns, and allow full conformity of the research and experimentation write-off.

“I don’t think I can support a bill with promises that issues with this bill will be fixed later,” Cheatum said.

Cheatum and every other committee Republican voted in favor of advancing the bill to the floor. Monks, arguing in favor, said, “This is a good bill, needs to get done. We need to get this done.”

The two Democrats on the committee, Reps. Steve Berch of Boise and John Gannon of Boise, opposed the bill because of the impact to the state budget.

“It’s very clear that we’re cutting budgets, and this bill will just continue that process,” Berch said. “And it’s not just trimming fat. It’s cutting bone and muscle, and we heard many examples of that here today.”

Gannon said he didn’t feel like the estimates provided on the state revenue reductions were accurate, which could have major implications. He said the Legislature should postpone a vote until they can better determine how much it will cost.

House Bill 559 went to the House floor, where it may be brought up for debate and vote by the chamber at a later date.

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