BOISE, Idaho — On Wednesday, Governor Brad Little signed the first House Bill of the 2026 legislative session into law.
House Bill 559 (HB-559) aligns Idaho's state tax code with federal changes to the Internal Revenue Code enacted by President Donald Trump's Big Beautiful Bill. HB-559 is retroactive to Jan. 1, 2025.
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Those changes include no state income taxes on tips and overtime. Seniors will also see no state tax on social security income and added bonus deduction opportunities.
Additionally, HB-559 provides a 5% credit for in-state businesses that incur "specified research and experimental expenditures."
Depreciation adjustments will remain mostly unchanged under the new state law.
The bill is estimated to reduce state revenue during the 2026 fiscal year by an estimated $155 million and $175 million for the 2027 fiscal year.
The tax cuts come amid a roughly $40-50 million shortfall in the state budget. The bill was sponsored by Rep. Jeff Ehlers (R - District 21) and Sen. C. Scott Grow (R - District 14).
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