Income taxes, other states
INCOME TAXES – Amends existing law to revise provisions regarding credit for income taxes paid to another state.

RS29932 / H0108

This bill relates to income taxes. Since Idaho allows the qualified business deduction (IRC 199A) but other states don’t, the states are taxing income differently. The qualified business deduction is subtracted after the tax is calculated; other states are taxing the entire amount of income from their state sources because they don’t allow the federal deduction. The result is that Idaho’s credit for taxes paid is computed higher than it should be. The statute allowing the credit (63-3029) has been in place for many years and the qualified business deduction started in 2018. The deduction wasn’t taken into consideration when the credit statute was written.

Idaho Code needs to clarify that the credit for taxes paid calculation needs to include an adjustment to the tax paid to the other state to reflect only the tax on the amount of income that Idaho is taxing.

Bill Events
Date Description
02/09 Introduced, read first time, referred to JRA for Printing
02/10 Reported Printed and Referred to Revenue & Taxation
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