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H0158...............................................by REVENUE AND TAXATION
INCOME TAX - Amends, repeals and adds to existing law to reduce the
individual income tax rates for individuals; to provide for rebates of
10.6% of the 1999 income tax paid by individuals, subject to a $25.00
minimum and $25,000 maximum; to increase the grocery tax credit for
individuals; to reduce the corporate income tax rate and franchise tax; to
provide for an increase in deduction for capital gains; to provide for a
new employee income tax credit; to provide income tax credits for research
expenditures and creation of new jobs; to change the child care deduction
to a credit equal to one-half the federal credit; and to permanently
increase credit for caring for a dependent over 65 years of age or caring
for a person who is developmentally disabled from $100 to $500.
02/06 House intro - 1st rdg - to printing
02/07 Rpt prt - to Rev/Tax
|||| LEGISLATURE OF THE STATE OF IDAHO ||||
Fifty-sixth Legislature First Regular Session - 2001
IN THE HOUSE OF REPRESENTATIVES
HOUSE BILL NO. 158
BY REVENUE AND TAXATION COMMITTEE
1 AN ACT
2 RELATING TO INCOME TAX RELIEF; AMENDING SECTION 63-3024, IDAHO CODE, TO PRO-
3 VIDE FOR A REDUCTION IN RATES OF ONE-TENTH OF ONE PERCENT FOR TAXABLE YEAR
4 2001 AND TO PROVIDE FOR A REDUCTION IN RATES OF FOUR-TENTHS OF ONE PERCENT
5 FOR TAXABLE YEAR 2002 AND THEREAFTER; AMENDING CHAPTER 30, TITLE 63, IDAHO
6 CODE, BY THE ADDITION OF A NEW SECTION 63-3081, IDAHO CODE, TO PROVIDE A
7 REBATE OF INCOME TAXES PAID BY INDIVIDUALS FOR TAXABLE YEARS BEGINNING IN
8 1999, TO DETERMINE THE RATE OF THE REBATE, TO SET MAXIMUM AND MINIMUM
9 AMOUNTS, TO PROVIDE PROCEDURES, TO APPROPRIATE MONEYS AND TO AUTHORIZE
10 CONTRACTS; REPEALING SECTION 63-3022D, IDAHO CODE; AMENDING SECTION
11 63-3022E, IDAHO CODE, TO INCREASE THE DEDUCTION FOR DEPENDENTS SIXTY-FIVE
12 YEARS OF AGE OR OLDER OR PERSONS WITH DEVELOPMENTAL DISABILITIES FROM ONE
13 THOUSAND DOLLARS TO FIVE THOUSAND DOLLARS; AMENDING SECTION 63-3022H,
14 IDAHO CODE, TO INCREASE THE DEDUCTION ALLOWED FOR QUALIFIED CAPITAL GAINS
15 AND TO MAKE TECHNICAL CORRECTIONS; AMENDING SECTION 63-3024A, IDAHO CODE,
16 TO INCREASE THE INCOME TAX CREDIT FOR SALES TAXES PAID BY INDIVIDUALS AND
17 TO MAKE TECHNICAL CORRECTIONS; AMENDING SECTION 63-3025, IDAHO CODE, TO
18 REDUCE THE CORPORATE INCOME TAX RATE FROM EIGHT TO SEVEN AND EIGHT-TENTHS
19 PERCENT FOR TAXABLE YEAR 2001 AND TO SEVEN AND FIVE-TENTHS PERCENT FOR
20 TAXABLE YEAR 2002 AND THEREAFTER; AMENDING SECTION 63-3025A, IDAHO CODE,
21 TO REDUCE THE CORPORATE FRANCHISE TAX RATE FROM EIGHT PERCENT TO THE RATE
22 OF THE CORPORATE INCOME TAX AND TO MAKE TECHNICAL CORRECTIONS; AMENDING
23 SECTION 63-3025D, IDAHO CODE, TO INCREASE THE PAYMENT FOR DEPENDENTS
24 SIXTY-FIVE YEARS OF AGE OR OLDER OR PERSONS WITH DEVELOPMENTAL DISABILI-
25 TIES FROM ONE HUNDRED DOLLARS TO FIVE HUNDRED DOLLARS AND TO MAKE A TECH-
26 NICAL CORRECTION; AMENDING SECTIONS 63-3029E AND 63-3029F, IDAHO CODE, TO
27 EXPAND THE NEW JOBS CREDIT BY REMOVING THE LIMITATION OF QUALIFYING TAX-
28 PAYERS TO REVENUE-PRODUCING ENTERPRISE CREATING VALUE-ADDED NATURAL
29 RESOURCE PRODUCTS; AMENDING CHAPTER 30, TITLE 63, IDAHO CODE, BY THE
30 ADDITION OF A NEW SECTION 63-3029G, IDAHO CODE, TO PROVIDE AN INCOME TAX
31 CREDIT FOR CERTAIN EXPENDITURES RELATING TO RESEARCH AND DEVELOPMENT CON-
32 DUCTED IN IDAHO, TO PROVIDE A SUNSET, TO PROVIDE A CARRYOVER OF UNUSED
33 CREDITS, TO PROVIDE DEFINITIONS AND TO PROVIDE PROCEDURES; AMENDING SEC-
34 TION 63-3029H, IDAHO CODE, TO REDESIGNATE THE SECTION; AMENDING CHAPTER
35 30, TITLE 63, IDAHO CODE, BY THE ADDITION OF A NEW SECTION 63-3029H, IDAHO
36 CODE, TO PROVIDE A CREDIT FOR EXPENSES FOR HOUSEHOLD AND DEPENDENT CARE;
37 REPEALING SECTIONS 63-3029E AND 63-3029F, IDAHO CODE; AMENDING CHAPTER 30,
38 TITLE 63, IDAHO CODE, BY THE ADDITION OF A NEW SECTION 63-3029E, IDAHO
39 CODE, TO PROVIDE DEFINITIONS AND CONSTRUCTION OF TERMS; AMENDING CHAPTER
40 30, TITLE 63, IDAHO CODE, BY THE ADDITION OF A NEW SECTION 63-3029F, IDAHO
41 CODE, TO PROVIDE SPECIAL CREDITS TO THE INCOME TAX FOR NEW EMPLOYEES FOR
42 AN ENTERPRISE THAT PRODUCES, ASSEMBLES, FABRICATES OR PROCESSES NATURAL
43 RESOURCE PRODUCTS; PROVIDING FOR NONSEVERABILITY OF CERTAIN PROVISIONS OF
44 THIS ACT; DECLARING AN EMERGENCY, PROVIDING RETROACTIVE APPLICATION FOR
45 CERTAIN PROVISIONS OF THIS ACT AND PROVIDING EFFECTIVE DATES.
2
1 Be It Enacted by the Legislature of the State of Idaho:
2 SECTION 1. That Section 63-3024, Idaho Code, be, and the same is hereby
3 amended to read as follows:
4 63-3024. INDIVIDUALS' TAX AND TAX ON ESTATES AND TRUSTS. For taxable year
5 20001, a tax measured by Idaho taxable income as defined in this chapter is
6 hereby imposed upon every individual, trust, or estate required by this chap-
7 ter to file a return.
8 (a) (i) The tax imposed upon individuals, trusts and estates shall be
9 computed at the following rates:
10 When Idaho taxable income is: The rate is:
11 Less than $1,000 One and nine-tenths percent (1.9%)
12 $1,000 but less than $2,000 $19, plus three and nine-tenths
13 percent (3.9%) of the amount over $1,000
14 $2,000 but less than $3,000 $58, plus four and four-tenths
15 percent (4.4%) of the amount over $2,000
16 $3,000 but less than $4,000 $102, plus five and four-tenths
17 percent (5.4%) of the amount over $3,000
18 $4,000 but less than $5,000 $156, plus six and four-tenths
19 percent (6.4%) of the amount over $4,000
20 $5,000 but less than $7,500 $220, plus seven and four-tenths
21 percent (7.4%) of the amount over $5,000
22 $7,500 but less than $20,000 $405, plus seven and seven-tenths
23 percent (7.7%) of the amount over $7,500
24 Over $20,000 $1,367.50, plus eight and one-tenth
25 percent (8.1%) of the amount over $20,000
26 (ii) For taxable year 20012 and each taxable year thereafter, a tax mea-
27 sured by Idaho taxable income as defined in this chapter is hereby imposed
28 upon every individual, trust, or estate required by this chapter to file a
29 return.
30 The tax imposed upon individuals, trusts and estates shall be computed at the
31 following rates:
32 When Idaho taxable income is: The rate is:
33 Less than $1,000 Two percent (2.0%)
34 $1,000 but less than $2,000 $20, plus four percent (4.0%)
35 of the amount over $1,000
36 $2,000 but less than $3,000 $60, plus four and one-half percent
37 (4.5%) of the amount over $2,000
38 $3,000 but less than $4,000 $105, plus five and one-half percent
39 (5.5%) of the amount over $3,000
40 $4,000 but less than $5,000 $160, plus six and one-half percent
41 (6.5%) of the amount over $4,000
42 $5,000 but less than $7,500 $225, plus seven and one-half percent
43 (7.5%) of the amount over $5,000
44 $7,500 but less than $20,000 $412.50, plus seven and eight-tenths percent
45 (7.8%) of the amount over $7,500
46 Over $20,000 $1,387.50, plus eight and two-tenths percent
47 (8.2%) of the amount over $20,000
48 Less than $1,000 One and five-tenths percent (1.5%)
49 $1,000 but less than $2,000 $15, plus three and five-tenths percent
50 (3.5%) of the amount over $1,000
51 $2,000 but less than $3,000 $50, plus four percent
52 (4.0%) of the amount over $2,000
53 $3,000 but less than $4,000 $90, plus five percent
3
1 (5.0%) of the amount over $3,000
2 $4,000 but less than $5,000 $140, plus six percent
3 (6.0%) of the amount over $4,000
4 $5,000 but less than $7,500 $200, plus seven percent
5 (7.0%) of the amount over $5,000
6 $7,500 but less than $20,000 $375, plus seven and three-tenths percent
7 (7.3%) of the amount over $7,500
8 Over $20,000 $1,287.50, plus seven and seven-tenths percent
9 (7.7%) of the amount over $20,000
10 For taxable year 2000 and each year thereafter, the state tax commission
11 shall prescribe a factor which shall be used to compute the Idaho income tax
12 brackets provided in subsections (a)(i) and (a)(ii) of this section. The fac-
13 tor shall provide an adjustment to the Idaho tax brackets so that inflation
14 will not result in a tax increase. The Idaho tax brackets shall be adjusted as
15 follows: multiply the bracket amounts by the percentage (the consumer price
16 index for the calendar year immediately preceding the calendar year to which
17 the adjusted brackets will apply divided by the consumer price index for cal-
18 endar year 1998). For the purpose of this computation, the consumer price
19 index for any calendar year is the average of the consumer price index as of
20 the close of the twelve (12) month period for the immediately preceding calen-
21 dar year as adopted by the state tax commission. This adoption shall be exempt
22 from the provisions of chapter 52, title 67, Idaho Code. The consumer price
23 index shall mean the consumer price index for all U.S. urban consumers pub-
24 lished by the United States department of labor. The state tax commission
25 shall annually include the factor as provided in this subsection to multiply
26 against Idaho taxable income in the brackets above to arrive at that year's
27 taxable income for tax bracket purposes.
28 (b) In case a joint return is filed by husband and wife pursuant to the
29 provisions of section 63-3031, Idaho Code, the tax imposed by this section
30 shall be twice the tax which would be imposed on one-half (1/2) of the aggre-
31 gate Idaho taxable income. For the purposes of this section, a return of a
32 surviving spouse, as defined in section 2(a) of the Internal Revenue Code, and
33 a head of household, as defined in section 2(b) of the Internal Revenue Code,
34 shall be treated as a joint return and the tax imposed shall be twice the tax
35 which would be imposed on one-half (1/2) of the Idaho taxable income.
36 (c) The state tax commission shall compute and publish Idaho income tax
37 liability for taxpayers at the midpoint of each bracket of Idaho taxable
38 income in fifty dollar ($50.00) steps to fifty thousand dollars ($50,000),
39 rounding such calculations to the nearest dollar. Taxpayers having income
40 within such brackets shall file returns based upon and pay taxes according to
41 the schedule thus established. The state tax commission shall promulgate rules
42 defining the conditions upon which such returns shall be filed.
43 SECTION 2. That Chapter 30, Title 63, Idaho Code, be, and the same is
44 hereby amended by the addition thereto of a NEW SECTION, to be known and des-
45 ignated as Section 63-3081, Idaho Code, and to read as follows:
46 63-3081. REBATE OF INCOME TAX. (1) Subject to the limitations of this
47 section, in regard to each individual income tax return required to be filed
48 pursuant to section 63-3030, Idaho Code, and that is actually filed, for a
49 twelve (12) month taxable year beginning in 1999 for which tax is imposed by
50 section 63-3024, Idaho Code, on at least one dollar ($1.00) of Idaho taxable
51 income, the state tax commission shall, on a one-time basis, rebate to the
52 taxpayer named on the return the amount specified in subsection (2) of this
53 section. In the case of a joint return, the rebate shall be paid to both tax-
4
1 payers jointly.
2 (2) (a) The rebate provided by subsection (1) of this section shall be
3 ten and six-tenths percent (10.6%) of the amount of tax computed under
4 section 63-3024, Idaho Code, reduced by credits provided by:
5 (i) Section 63-3029, Idaho Code, relating to taxes paid to another
6 state;
7 (ii) Sections 63-3029A and 63-3029C, Idaho Code, relating to certain
8 charitable contributions;
9 (iii) Section 63-3029B, Idaho Code, relating to capital investments;
10 (iv) Section 63-3029D, Idaho Code, relating to qualified equipment
11 utilizing postconsumer waste or postindustrial waste.
12 (b) When the amount of a rebate payable under subsection (2)(a) of this
13 section is less than twenty-five dollars ($25.00), the amount of the
14 rebate shall be twenty-five dollars ($25.00). When the amount of a rebate
15 payable under subsection (2)(a) of this section is more than two thousand
16 five hundred dollars ($2,500), the amount of the rebate shall be two thou-
17 sand five hundred dollars ($2,500). In the case of married taxpayers fil-
18 ing separate returns, only one (1) minimum or maximum rebate shall be
19 paid.
20 (3) No rebate shall be paid pursuant to this section in regard to a
21 return described in subsection (1) of this section if the return is not filed
22 within three (3) years of the original due date of the return, without regard
23 to extensions. In the event that the amount of tax due on a return filed
24 within the time required by this subsection is amended by the taxpayer or
25 changed by the state tax commission the rebate provided by this section shall
26 be adjusted proportionally. The state tax commission may offset a rebate
27 against taxes assessed the taxpayer but unpaid.
28 (4) In the case of a short period return, the rebates provided by this
29 section shall be reduced in proportion to the portion of calendar year 1999 to
30 which the return applies.
31 (5) Except as provided in this subsection, no application for a rebate
32 provided in this section shall be required. The state tax commission shall
33 cause each rebate to be mailed to the taxpayer or taxpayers at the address
34 shown on the return, unless, as a result of a more recent return, a newer
35 address is shown on the commission's records. The state tax commission may
36 provide a procedure by which rebates that are returned or undeliverable may be
37 claimed.
38 (6) Any person aggrieved by any action of the state tax commission in
39 regard to the rebates provided in this section shall file a petition with the
40 state tax commission in the manner provided in section 63-3045, Idaho Code.
41 Such a petition shall be subject to administrative and judicial review in the
42 manner provided by sections 63-3045 through 63-3049, Idaho Code.
43 (7) Rebates authorized by this section shall be paid from the state
44 refund account established by section 63-3067, Idaho Code, from which the
45 amounts necessary to pay the rebates are hereby appropriated. In the event
46 that, at the time the rebates are paid, there is an insufficient balance in
47 the state refund account, the state board of examiners, upon application by
48 the state tax commission, shall transfer sufficient funds from the general
49 fund to make the rebate payments and any other refunds due and payable from
50 the state refund account.
51 (8) The state tax commission, the state treasurer and the state control-
52 ler may contract with a commercial bank for some or all of the services,
53 including issuing payments, relating to payment of the rebate provided in
54 this section.
5
1 SECTION 3. That Section 63-3022D, Idaho Code, be, and the same is hereby
2 repealed.
3 SECTION 4. That Section 63-3022E, Idaho Code, be, and the same is hereby
4 amended to read as follows:
5 63-3022E. HOUSEHOLD DEDUCTION FOR DEPENDENTS SIXTY-FIVE YEARS OF AGE OR
6 OLDER OR PERSONS WITH DEVELOPMENTAL DISABILITIES. (1) An additional deduction
7 from taxable income shall be allowed in the case of an individual who main-
8 tains a household, which includes as an immediate member of the family resid-
9 ing in that household, one (1) or more individuals sixty-five (65) years of
10 age or older, or a person with developmental disabilities as defined in sub-
11 section (5) of section 66-402, Idaho Code, regardless of the age of the person
12 when such developmental disability appeared, each of whom receives more than
13 one-half (1/2) of his or her support for the year from the individual who
14 maintains the household. The amount of the deduction shall be one five thou-
15 sand dollars ($15,000) for each individual sixty-five (65) years of age or
16 older or with developmental disabilities.
17 (2) There shall not be allowed more than three (3) deductions of one five
18 thousand dollars ($15,000) under the provisions of this section on any one (1)
19 return.
20 (3) No deductions shall be allowed under this section for the person(s)
21 in whose name(s) the income tax return is filed except as set forth in subsec-
22 tion (4) of this section.
23 (4) A deduction of one five thousand dollars ($15,000) shall be allowed
24 under this section for a person with a developmental disability, as defined in
25 subsection (5) of section 66-402, Idaho Code, who is filing his own return.
26 SECTION 5. That Section 63-3022H, Idaho Code, be, and the same is hereby
27 amended to read as follows:
28 63-3022H. DEDUCTION OF CAPITAL GAINS. (1) If an individual taxpayer
29 reports a net capital gain in determining taxable income, sixty one hundred
30 percent (6100%) of the net capital gain from the sale or exchange of qualified
31 property shall be a deduction in determining taxable income.
32 (2) The deduction provided in this section is limited to the amount of
33 the net capital gain from all property included in federal taxable income. Net
34 capital gains treated as ordinary income by the iInternal rRevenue cCode do
35 not qualify for the deduction allowed in this section. The deduction otherwise
36 allowable under this section shall be reduced by the amount of any federal
37 capital gains deduction relating to such property, but not below zero.
38 (3) As used in this section "qualified property" means the following
39 property having an Idaho situs at the time of sale:
40 (a) Real property held at least eighteen (18) months;
41 (b) Tangible personal property used in Idaho for at least twelve (12)
42 months by a revenue-producing enterprise;
43 (c) Cattle or horses held for breeding, draft, dairy or sporting purposes
44 for at least twenty-four (24) months if more than one-half (1/2) of the
45 taxpayer's gross income (as defined in section 61(a) of the iInternal
46 rRevenue cCode) for the taxable year is from farming or ranching opera-
47 tions in Idaho;
48 (d) Breeding livestock other than cattle or horses held at least twelve
49 (12) months if more than one-half (1/2) of the taxpayer's gross income (as
50 defined in section 61(a) of the iInternal rRevenue cCode) for the taxable
51 year is from farming or ranching operations in Idaho;
6
1 (e) Timber grown in Idaho and held at least twenty-four (24) months;
2 (f) In determining the period for which property subject to this section
3 has been held by a taxpayer, the provisions of section 1223 of the
4 iInternal rRevenue cCode shall apply, except that when the holding period
5 includes any period during which the taxpayer held property other than the
6 property sold, all property held during the holding period must qualify
7 under this section.
8 (4) If an individual reports a capital gain from qualified property from
9 an S corporation or a partnership, a deduction shall be allowed under this
10 section only to the extent the individual held his interest in the income of
11 the S corporation or the partnership for the time required by subsection (3)
12 of this section for the property sold.
13 (5) If an individual reports a capital gain from an estate, no deduction
14 shall be allowed under this section unless the holding period required in sub-
15 section (3) of this section was satisfied by the decedent, the estate, or the
16 beneficiary, or a combination thereof.
17 (6) If an individual reports a capital gain from a trust, no deduction
18 shall be allowed under this section unless the holding period required in sub-
19 section (3) of this section was satisfied by the grantor, the trust, or the
20 beneficiary, or a combination thereof.
21 (7) As used in this section "revenue-producing enterprise" means:
22 (a) The production, assembly, fabrication, manufacture, or processing of
23 any agricultural, mineral or manufactured product;
24 (b) The storage, warehousing, distribution, or sale at wholesale of any
25 products of agriculture, mining or manufacturing;
26 (c) The feeding of livestock at a feedlot;
27 (d) The operation of laboratories or other facilities for scientific,
28 agricultural, animal husbandry, or industrial research, development, or
29 testing.
30 SECTION 6. That Section 63-3024A, Idaho Code, be, and the same is hereby
31 amended to read as follows:
32 63-3024A. CREDITS AND REFUNDS. (a) Any resident individual not entitled
33 to the credit allowed in subsection (b)(1), who is required to file by law and
34 who has filed an Idaho income tax return, shall be allowed a credit against
35 taxes due under the Idaho income tax act equal to the amount of fifteen thirty
36 dollars ($1530.00) for each personal exemption for which a deduction is per-
37 mitted by section 151(b) and (c) of the Internal Revenue Code if such deduc-
38 tion is claimed on the taxpayer's Idaho income tax return, and if the individ-
39 ual for whom the deduction is claimed is a resident of the state of Idaho. If
40 taxes due are less than the total credit allowed, the taxpayer shall be paid a
41 refund equal to the balance of the unused credit. If the credit or refund is
42 not claimed for the year for which the individual income tax return is filed,
43 the right thereafter to claim such credit or refund shall be forfeited. The
44 state tax commission shall prescribe the method by which the refund, if any,
45 is to be made to the taxpayer.
46 (b) (1) A resident individual who has reached his sixty-fifth birthday
47 before the end of his taxable year, who is required to file by law and who
48 has filed an Idaho income tax return, shall be allowed a credit against
49 taxes due under the Idaho income tax act equal to the amount of thirty
50 sixty dollars ($360.00) for each personal exemption representing himself,
51 a spouse over the age of sixty-five (65) years, or a dependent over the
52 age of sixty-five (65) years, but shall be allowed a credit against taxes
53 due under the Idaho income tax act equal to fifteen thirty dollars
7
1 ($1530.00) for each personal exemption representing a spouse or dependent
2 under the age of sixty-five (65) years. If taxes due are less than the
3 total credit allowed, the taxpayer shall be paid a refund equal to the
4 balance of the unused credit. If the credit or refund is not claimed for
5 the year for which the individual income tax return is filed, the right
6 thereafter to claim such credit or refund shall be forfeited. The state
7 tax commission shall prescribe the method by which the refund, if any, is
8 to be made to the taxpayer.
9 (2) A resident individual who has reached his sixty-fifth birthday and is
10 not required by law to file an Idaho income tax return and who has
11 received no credit or refund under any other subsection of this section,
12 shall be entitled to a refund of thirty sixty dollars ($360.00). Any
13 refund shall be paid to such individual only upon his making application
14 therefor at such time and in such manner as may be prescribed by the state
15 tax commission.
16 (c) A resident individual of the state of Idaho who is:
17 (i) blind, or
18 (ii) a disabled American veteran of any war engaged in by the United
19 States, whose disability is recognized as a service connected disability
20 of a degree of ten per cent percent (10%) or more, or who is in receipt of
21 a pension for nonservice connected disabilities, in accordance with laws
22 and regulations administered by the United States veterans administration,
23 substantiated by a statement as to status signed by a responsible officer
24 of the United States veterans administration, or
25 (iii) over sixty-two (62) years of age, and has been allowed none, or less
26 than all, of the credit provided by subsection (a) or subsection (b) of
27 this section, shall be entitled to a payment from the refund fund in an
28 amount equal to fifteen thirty dollars ($1530.00), or the balance of his
29 unused credit, whichever is less, upon making application therefor at such
30 time and in such manner as the state tax commission may prescribe.
31 (d) Any part-year resident entitled to a credit under this section shall
32 receive a proportionate credit, in the manner above provided, reflecting the
33 part of the year in which he was domiciled in this state.
34 (e) No credit or refund may be claimed for an exemption which represents
35 a person who has himself filed an Idaho income tax return claiming a deduction
36 for his own personal exemption, and in no event shall more than one (1) tax-
37 payer be allowed a credit or refund for the same exemption, or under more than
38 one (1) subsection of this section.
39 (f) The refunds authorized by this section shall be paid from the state
40 refund fund in the same manner as the refunds authorized by section 63-3067,
41 Idaho Code.
42 (g) An application for any refund which is due and payable under the pro-
43 visions of this section must be filed with the state tax commission within
44 three (3) years of:
45 (i) the due date, including extensions, of the return required under sec-
46 tion 63-3030, Idaho Code, if the applicant is required to file a return,
47 or
48 (ii) the 15th day of April of the year following the year to which the
49 application relates if the applicant is not required to file a return.
50 SECTION 7. That Section 63-3025, Idaho Code, be, and the same is hereby
51 amended to read as follows:
52 63-3025. TAX ON CORPORATE INCOME. For taxable years commencing on and
53 after January 1, 1987 2001, a tax is hereby imposed on the Idaho taxable
8
1 income of a corporation which transacts or is authorized to transact business
2 in this state or which has income attributable to this state. The tax shall be
3 equal to eight seven and eight-tenths percent (7.8%) of Idaho taxable income
4 for taxable year 2001 and seven and five-tenths percent (7.5%) of Idaho tax-
5 able income for taxable year 2002 and thereafter; provided, however, that the
6 tax shall not be less than twenty dollars ($20.00); provided further that the
7 twenty dollar ($20.00) minimum payment shall not be collected from nonproduc-
8 tive mining corporations. The tax imposed by this section shall not apply to
9 corporations taxed pursuant to the provisions of section 63-3025A, Idaho Code.
10 SECTION 8. That Section 63-3025A, Idaho Code, be, and the same is hereby
11 amended to read as follows:
12 63-3025A. FRANCHISE TAX. For taxable years commencing on and after Janu-
13 ary 1, 1987 2001, a franchise tax shall be imposed upon any corporation for
14 the privilege of exercising its corporate franchise within the state during
15 such taxable year, including, but not limited to, corporations engaged in
16 business in Idaho for the exclusive purpose of performing contracts with the
17 United States department of energy at the Idaho national engineering and envi-
18 ronmental laboratory, which tax shall be measured by income which is attribut-
19 able to this state under the provisions of this chapter and which tax shall be
20 equal to eight percent (8%) of Idaho taxable income at the rate provided in
21 section 63-3025, Idaho Code; provided, however, that the tax shall not be less
22 than twenty dollars ($20.00); provided further that the twenty dollar ($20.00)
23 minimum payment shall not be collected from nonproductive mining corporations;
24 but the twenty dollar ($20.00) minimum tax shall apply to corporations quali-
25 fied to file returns and actually filing returns under the provisions of sub-
26 chapter "S" of the Internal Revenue Code.
27 SECTION 9. That Section 63-3025D, Idaho Code, be, and the same is hereby
28 amended to read as follows:
29 63-3025D. PAYMENT FOR DEPENDENTS SIXTY-FIVE YEARS OF AGE OR OLDER OR PER-
30 SONS WITH DEVELOPMENTAL DISABILITIES. (1) In lieu of the deduction from tax-
31 able income allowed by section 63-3022E, Idaho Code, a resident individual who
32 maintains a household, which includes as an immediate member of the family
33 residing in that household, one (1) or more individuals sixty-five (65) years
34 of age or older or individuals with developmental disabilities, as defined in
35 subsection (5) of section 66-402, Idaho Code, each of whom receives more than
36 one-half (1/2) of his or her support for the year from the individual who
37 maintains the household, shall be entitled to a payment from the refund
38 account of one five hundred dollars ($1500) for each such elderly member of
39 the family or family member with a developmental disability. Any such payment
40 shall be paid to such individual only upon his making application therefor at
41 such time and in such manner as may be prescribed by the state tax commission.
42 (2) No more than three (3) such payments shall be made under the provi-
43 sions of this section to any one (1) individual in any calendar year.
44 (3) No payment may be claimed under the provisions of this section by the
45 individual himself except as set forth in subsection (4) of this section.
46 (4) A credit of one five hundred dollars ($1500) shall be allowed under
47 this section for a person with a developmental disability as defined in sub-
48 section (5) of section 66-402, Idaho Code, who is filing his own tax return.
49 SECTION 10. That Section 63-3029E, Idaho Code, be, and the same is hereby
50 amended to read as follows:
9
1 63-3029E. DEFINITIONS -- CONSTRUCTION OF TERMS. As used in this section
2 and in section 63-3029F, Idaho Code:
3 (1) (a) "New employee" means a person from whom Idaho income tax has been
4 withheld, employed by the taxpayer, in a revenue-producing enterprise cre-
5 ating value-added natural resource products, and covered for unemployment
6 insurance purposes under chapter 13, title 72, Idaho Code, during the tax-
7 able year for which the credit allowed by section 63-3029F, Idaho Code, is
8 claimed. A person shall be deemed to be so engaged if such person performs
9 duties on:
10 (i) A regular full-time basis; or
11 (ii) A part-time basis if such person is customarily performing such
12 duties at least twenty (20) hours per week.
13 No credit shall be earned unless the new employee shall have performed
14 such duties for the taxpayer for a minimum of nine (9) months during the
15 taxable year for which the credit is claimed.
16 (b) The provisions of paragraph (a) of this subsection notwithstanding,
17 no credit shall be allowed for employment of persons by a taxpayer who
18 acquires a revenue-producing enterprise from another taxpayer or who oper-
19 ates in a place of business the same or a substantially identical revenue-
20 producing value-added natural resource products enterprise business as
21 operated by another taxpayer within the prior twelve (12) months, except
22 as the prior taxpayer would have qualified under the provisions of para-
23 graph (c) of this subsection. Employees transferred from a related tax-
24 payer shall not be included in the computation of the credit.
25 (c) The number of employees during any taxable year for any taxpayer
26 shall be the mathematical average of the number of employees reported to
27 the Idaho department of labor for employment security purposes during the
28 twelve (12) months of the taxable year which qualified under paragraph (a)
29 of this subsection. In the event the business is in operation for less
30 than the entire taxable year, the number of employees of the business for
31 the year shall be the average number actually employed during the months
32 of operation, providing that the qualifications of paragraph (a) of this
33 subsection are met.
34 (2) "Revenue-producing enterprise" means the production, assembly, fabri-
35 cation, manufacture or processing of any natural resource product.
36 (3) "Same or a substantially identical revenue-producing enterprise busi-
37 ness" means a revenue-producing enterprise business in which the products pro-
38 duced or sold, or the activities conducted are the same in character and use
39 and are produced, sold or conducted in the same manner as, or for the same
40 types of customers as, the products or activities produced, sold or conducted
41 in another revenue-producing enterprise business.
42 SECTION 11. That Section 63-3029F, Idaho Code, be, and the same is hereby
43 amended to read as follows:
44 63-3029F. SPECIAL CREDIT AVAILABLE -- NEW EMPLOYEES. (1) Any taxpayer
45 shall be allowed a credit, in an amount determined under subsection (2) of
46 this section, against the tax imposed by this chapter, other than the tax
47 imposed by section 63-3082, Idaho Code, for any taxable year during which the
48 taxpayer's employment of new employees, as defined under section 63-3029E(1),
49 Idaho Code, increases above the taxpayer's average employment for either: (a)
50 the prior taxable year, or (b) the average of three (3) prior taxable years,
51 whichever is higher. No credit shall be allowed under this section unless the
52 number of new employees equals or exceeds one (1) person.
53 (2) The credit authorized in subsection (1) of this section shall be five
10
1 hundred dollars ($500) per new employee, but the total credit allowed shall
2 not exceed three and one-quarter percent (3.25%) of net income from the
3 taxpayer's corporate, proprietorship, partnership, small business corporation
4 or limited liability company revenue-producing enterprise business in which
5 the employment occurred. Additionally, the total of this and all other credits
6 allowed under this chapter except for the credits allowed under sections
7 63-3024A, 63-3025D and 63-3029, Idaho Code, taken during any taxable year
8 shall not exceed forty-five percent (45%) of the tax otherwise imposed on the
9 taxpayer for the taxable year for which such credit is allowed.
10 (3) If the sum of the credit carryovers from the credit allowed by sub-
11 section (2) of this section and the amount of credit for the taxable year from
12 the credit allowed by subsection (2) of this section exceed the limitation
13 imposed by subsection (2) of this section for the current taxable year, the
14 excess attributable to the current taxable year's credit shall be a credit
15 carryover to the three (3) succeeding taxable years. The entire amount of
16 unused credit shall be carried forward to the earliest of the succeeding
17 years, wherein the oldest available unused credit shall be used first, so long
18 as the employment level for which the credit was granted is still maintained.
19 SECTION 12. That Chapter 30, Title 63, Idaho Code, be, and the same is
20 hereby amended by the addition thereto of a NEW SECTION, to be known and des-
21 ignated as Section 63-3029G, Idaho Code, and to read as follows:
22 63-3029G. CREDITS FOR RESEARCH ACTIVITIES CONDUCTED IN THIS STATE --
23 CARRY FORWARD.
24 (1) (a) Subject to the limitations of this section, for taxable years
25 beginning between January 1, 2001, and December 31, 2003, inclusive, there
26 shall be allowed to a taxpayer a nonrefundable credit against taxes
27 imposed by sections 63-3024, 63-3025 and 63-3025A, Idaho Code, for
28 increasing research activities in Idaho.
29 (b) The credit allowed by subsection (1)(a) of this section shall be the
30 sum of:
31 (i) Five percent (5%) of the excess of qualified research payments
32 for research conducted in Idaho over the base amount; and
33 (ii) Five percent (5%) basic research payments allowable under sub-
34 section (e) of section 41 of the Internal Revenue Code for basic
35 research conducted in Idaho.
36 (2) As used in this section:
37 (a) The terms "qualified research payments," "qualified research," "basic
38 research payments" and "basic research" shall be as defined in section 41
39 of the Internal Revenue Code except that the research must be conducted in
40 Idaho.
41 (b) The term "base amount" shall mean an amount calculated as provided in
42 sections 41(c) and 41(h) of the Internal Revenue Code, except that:
43 (i) The base amount does not include the calculation of the alter-
44 native incremental credit provided for in section 41(c)(4) of the
45 Internal Revenue Code;
46 (ii) A taxpayer's gross receipts include only those gross receipts
47 attributable to sources within this state as provided in subsections
48 (q) and (r) of section 63-3027, Idaho Code; and
49 (iii) Notwithstanding section 41(c) of the Internal Revenue Code, for
50 purposes of calculating the base amount, a taxpayer:
51 (A) May elect to be treated as a start-up company as provided
52 in section 41(c)(3)(B) of the Internal Revenue Code, regardless
53 of whether the taxpayer meets the requirements of section
11
1 41(c)(3)(B)(i)(I) or (II) of the Internal Revenue Code; and
2 (B) May not revoke an election to be treated as a start-up com-
3 pany.
4 (3) The credit allowed by subsection (1)(a) of this section together with
5 any credits carried forward under subsection (5) of this section shall not
6 exceed the amount of tax due under sections 63-3024, 63-3025 and 63-3025A,
7 Idaho Code, after allowance for all other credits permitted by this chapter.
8 When credits earned in more than one (1) taxable year are available, the old-
9 est credits shall be applied first.
10 (4) In the case of a group of corporations filing a combined report under
11 subsection (t) of section 63-3027, Idaho Code, credit earned by one (1) member
12 of the group but not used by that member may be used by another member of the
13 group. For a combined group of corporations, any member of the group may claim
14 credit carried forward unless the member who earned the credit is no longer
15 included in the combined group.
16 (5) The credit allowed by subsection (1)(a) of this section shall be
17 claimed for the taxable year during which the taxpayer qualifies for the
18 credit. If the credit exceeds the limitation under subsection (3) of this sec-
19 tion, the excess amount may be carried forward for a period that does not
20 exceed the next fourteen (14) taxable years.
21 (6) In addition to other needed rules, the state tax commission may pro-
22 mulgate rules prescribing, in the case of S corporations, partnerships, trusts
23 or estates, a method of attributing the credit under this section to the
24 shareholders, partners or beneficiaries in proportion to their share of the
25 income from the S corporation, partnership, trust or estate.
26 SECTION 13. That Section 63-3029H, Idaho Code, be, and the same is hereby
27 amended to read as follows:
28 63-3029HP. PRIORITY OF CREDITS. When a taxpayer subject to any taxes
29 imposed under this chapter is entitled to two (2) or more credits against such
30 taxes, the priority of credits shall be determined in the following order:
31 (a) Nonrefundable credits. Nonrefundable credits shall be applied to the
32 tax liability before application of refundable credits. If a taxpayer is enti-
33 tled to more than one (1) nonrefundable credit, the credits shall be applied
34 in the order in which the statutes authorizing the credits were enacted by the
35 legislature.
36 (b) Refundable credits. Refundable credits shall be applied to the tax
37 liability after application of any nonrefundable credits.
38 SECTION 14. That Chapter 30, Title 63, Idaho Code, be, and the same is
39 hereby amended by the addition thereto of a NEW SECTION, to be known and des-
40 ignated as Section 63-3029H, Idaho Code, and to read as follows:
41 63-3029H. CREDIT FOR HOUSEHOLD AND DEPENDENT CARE SERVICES NECESSARY FOR
42 GAINFUL EMPLOYMENT. (1) A resident individual who is entitled, for federal
43 income tax purposes, to claim and who does claim the credit provided by sec-
44 tion 21 of the Internal Revenue Code shall be entitled to a nonrefundable
45 credit against taxes imposed by section 63-3024, Idaho Code, equal to one-half
46 (1/2) of the credit allowable on that taxpayer's federal return for the same
47 taxable year.
48 (2) A nonresident or part-year resident individual who is entitled, for
49 federal income tax purposes, to claim and who does claim the credit provided
50 by section 21 of the Internal Revenue Code shall be entitled to a proportional
51 part of the credit otherwise provided in subsection (1) of this section. The
12
1 proportion shall be determined in accordance with the provisions of section
2 63-3026A(6), Idaho Code.
3 (3) The credit allowed by this section shall not exceed the total amount
4 of taxes due under section 63-3024, Idaho Code, after allowance of all other
5 credits provided in this chapter.
6 SECTION 15. That Sections 63-3029E and 63-3029F, Idaho Code, be, and the
7 same are hereby repealed.
8 SECTION 16. That Chapter 30, Title 63, Idaho Code, be, and the same is
9 hereby amended by the addition thereto of a NEW SECTION, to be known and des-
10 ignated as Section 63-3029E, Idaho Code, and to read as follows:
11 63-3029E. DEFINITIONS -- CONSTRUCTION OF TERMS. As used in this section
12 and in section 63-3029F, Idaho Code:
13 (1) (a) "New employee" means a person from whom Idaho income tax has
14 been withheld, employed by the taxpayer in a revenue-producing enterprise
15 creating value-added natural resource products, and covered for unemploy-
16 ment insurance purposes under chapter 13, title 72, Idaho Code, during the
17 taxable year for which the credit allowed by section 63-3029F, Idaho Code,
18 is claimed. A person shall be deemed to be so engaged if such person per-
19 forms duties on:
20 (i) A regular full-time basis; or
21 (ii) A part-time basis if such person is customarily performing such
22 duties at least twenty (20) hours per week.
23 No credit shall be earned unless the new employee shall have performed
24 such duties for the taxpayer for a minimum of nine (9) months during the
25 taxable year for which the credit is claimed.
26 (b) The provisions of paragraph (a) of this subsection notwithstanding,
27 no credit shall be allowed for employment of persons by a taxpayer who
28 acquires a revenue-producing enterprise from another taxpayer or who oper-
29 ates in a place of business the same or a substantially identical revenue-
30 producing value-added natural resource products enterprise as operated by
31 another taxpayer within the prior twelve (12) months, except as the prior
32 taxpayer would have qualified under the provisions of paragraph (c) of
33 this subsection. Employees transferred from a related taxpayer shall not
34 be included in the computation of the credit.
35 (c) The number of employees during any taxable year for any taxpayer
36 shall be the mathematical average of the number of employees reported to
37 the Idaho department of labor for employment security purposes during the
38 twelve (12) months of the taxable year which qualified under paragraph (a)
39 of this subsection. In the event the business is in operation for less
40 than the entire taxable year, the number of employees of the business for
41 the year shall be the average number actually employed during the months
42 of operation, providing that the qualifications of paragraph (a) of this
43 subsection are met.
44 (2) "Revenue-producing enterprise" means the production, assembly, fabri-
45 cation, manufacture or processing of any natural resource product.
46 (3) "Same or a substantially identical revenue-producing enterprise"
47 means a revenue-producing enterprise in which the products produced or sold,
48 or the activities conducted are the same in character and use and are pro-
49 duced, sold or conducted in the same manner as, or for the same types of cus-
50 tomers as, the products or activities produced, sold or conducted in another
51 revenue-producing enterprise.
13
1 SECTION 17. That Chapter 30, Title 63, Idaho Code, be, and the same is
2 hereby amended by the addition thereto of a NEW SECTION, to be known and des-
3 ignated as Section 63-3029F, Idaho Code, and to read as follows:
4 63-3029F. SPECIAL CREDIT AVAILABLE -- NEW EMPLOYEES. (1) Any taxpayer
5 shall be allowed a credit, in an amount determined under subsection (2) of
6 this section, against the tax imposed by this chapter, other than the tax
7 imposed by section 63-3082, Idaho Code, for any taxable year during which the
8 taxpayer's employment of new employees, as defined under section 63-3029E(1),
9 Idaho Code, increases above the taxpayer's average employment for either: (a)
10 the prior taxable year, or (b) the average of three (3) prior taxable years,
11 whichever is higher. No credit shall be allowed under this section unless the
12 number of new employees equals or exceeds one (1) person.
13 (2) The credit authorized in subsection (1) of this section shall be five
14 hundred dollars ($500) per new employee, but the total credit allowed shall
15 not exceed three and one-quarter percent (3.25%) of net income from the
16 taxpayer's corporate, proprietorship, partnership, small business corporation
17 or limited liability company revenue-producing enterprise in which the employ-
18 ment occurred. Additionally, the total of this and all other credits allowed
19 under this chapter except for the credits allowed under sections 63-3024A,
20 63-3025D and 63-3029, Idaho Code, taken during any taxable year shall not
21 exceed forty-five percent (45%) of the tax otherwise imposed on the taxpayer
22 for the taxable year for which such credit is allowed.
23 (3) If the sum of the credit carryovers from the credit allowed by sub-
24 section (2) of this section and the amount of credit for the taxable year from
25 the credit allowed by subsection (2) of this section exceed the limitation
26 imposed by subsection (2) of this section for the current taxable year, the
27 excess attributable to the current taxable year's credit shall be a credit
28 carryover to the three (3) succeeding taxable years. The entire amount of
29 unused credit shall be carried forward to the earliest of the succeeding
30 years, wherein the oldest available unused credit shall be used first, so long
31 as the employment level for which the credit was granted is still maintained.
32 SECTION 18. The provisions of Sections 10 through 12 of this act are
33 hereby declared to be nonseverable from other provisions within each section
34 and if any provision of any of those sections or the application of such pro-
35 vision to any person or circumstance is declared invalid for any reason, such
36 declaration shall render the entire section invalid but not other sections of
37 this act.
38 SECTION 19. An emergency existing therefor, which emergency is hereby
39 declared to exist, Sections 1 through 14 and Section 18 of this act shall be
40 in full force and effect on and after passage and approval and retroactively
41 to January 1, 2001. Sections 15, 16 and 17 of this act shall be in full force
42 and effect on and after January 1, 2004.
STATEMENT OF PURPOSE
RS 10971
This income tax relief bill makes permanent a 0.4% rate
reduction from year 2000 rate for individuals, rebates 10.6% of
1999 income tax paid to individuals subject to a $25 minimum
and $2,500 maximum, permanently doubles grocery credit for everyone
and permanently reduces the corporate income rate .5%. It
expands the current capital gains exclusion from 60% to 100%
for certain tangible assets and provides credits for Idaho
business development, including research and development and
creation of new jobs. It changes the child care deduction to a
credit equal to half the federal credit and permanently
increases the elderly dependant care credit from $100 to $500.
FISCAL IMPACT
2002 2003
Individual rate reduction $ 14.6 $ 76.5
*Indivjdual rebate 91.0
Grocery credit 18.6 18.8
Corporate rate 3.4 8.5
Research and Development 7.0 7.75
New jobs 1.5 1.5
Child care credit 1.5 1.5
Elderly dependant care credit 1.2 1.2
Capital gains 8.7 8.7
Total $147.5 $124.45
*only entry using one time "surplus funds."
Contact
Name: Representative Crow Representative Moyle
Phone: 332 1000
STATEMENT OF PURPOSE/FISCAL NOTE H 15