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H0444aa.............................................by REVENUE AND TAXATION
INCOME TAX - Amends existing law to delete the requirement that resident
military members reduce deductions and exemptions in proportion to
nontaxable military pay for state income tax purposes.
01/23 House intro - 1st rdg - to printing
01/24 Rpt prt - to Rev/Tax
02/15 Rpt out - to Gen Ord
02/16 Rpt out amen - to engros
02/17 Rpt engros - 1st rdg - to 2nd rdg as amen
02/20 2nd rdg - to 3rd rdg as amen
02/23 3rd rdg as amen - PASSED - 63-0-7
AYES -- Anderson, Andrus, Barrett, Bastian, Bayer, Bedke, Bell,
Bilbao, Black, Block, Boe, Bolz, Bradford, Cannon, Chadderdon, Clark,
Collins, Crow, Denney, Edmunson, Ellsworth, Eskridge, Field(18),
Garrett, Hart, Harwood, Henbest, Henderson, Jaquet, Kemp, Lake,
LeFavour, Loertscher, Martinez, Mathews, McGeachin, McKague, Miller,
Mitchell, Moyle, Nielsen, Nonini, Pasley-Stuart, Pence, Raybould,
Ring, Ringo, Roberts, Rusche, Rydalch, Sayler, Schaefer, Shepherd(2),
Shepherd(8), Shirley, Skippen, Smith(30), Smith(24), Smylie(Luker),
Snodgrass, Stevenson, Trail, Wills
NAYS -- None
Absent and excused -- Barraclough, Brackett, Deal, Field(23), Sali,
Wood, Mr. Speaker
Floor Sponsor - McKague
Title apvd - to Senate
02/24 Senate intro - 1st rdg - to Loc Gov
03/02 Rpt out - rec d/p - to 2nd rdg
03/03 2nd rdg - to 3rd rdg
03/07 3rd rdg - PASSED - 33-0-2
AYES -- Andreason, Brandt, Broadsword, Bunderson, Burkett, Cameron,
Coiner, Compton, Corder, Darrington, Davis, Fulcher, Gannon, Geddes,
Goedde, Hill, Jorgenson, Kelly, Keough, Langhorst, Little, Lodge,
Malepeai, Marley, McGee, McKenzie, Richardson, Schroeder, Stegner,
Stennett, Sweet, Werk, Williams
NAYS -- None
Absent and excused -- Burtenshaw, Pearce
Floor Sponsor - Williams
Title apvd - to House
03/08 To enrol
03/09 Rpt enrol - Sp signed
03/10 Pres signed
03/13 To Governor
03/14 Governor signed
Session Law Chapter 63
Effective: 01/01/05
]]]] LEGISLATURE OF THE STATE OF IDAHO ]]]]
Fifty-eighth Legislature Second Regular Session - 2006
IN THE HOUSE OF REPRESENTATIVES
HOUSE BILL NO. 444
BY REVENUE AND TAXATION COMMITTEE
1 AN ACT
2 RELATING TO INCOME TAXES; AMENDING SECTION 63-3022, IDAHO CODE, TO DELETE THE
3 REQUIREMENT THAT RESIDENT MILITARY MEMBERS REDUCE DEDUCTIONS AND EXEMP-
4 TIONS IN PROPORTION TO NONTAXABLE MILITARY PAY; DECLARING AN EMERGENCY AND
5 PROVIDING RETROACTIVE APPLICATION.
6 Be It Enacted by the Legislature of the State of Idaho:
7 SECTION 1. That Section 63-3022, Idaho Code, be, and the same is hereby
8 amended to read as follows:
9 63-3022. ADJUSTMENTS TO TAXABLE INCOME. The additions and subtractions
10 set forth in this section, and in sections 63-3022A through 63-3022Q, Idaho
11 Code, are to be applied to the extent allowed in computing Idaho taxable
12 income:
13 (a) Add any state and local taxes, as defined in section 164 of the
14 Internal Revenue Code and, measured by net income, paid or accrued during the
15 taxable year adjusted for state or local tax refunds used in arriving at tax-
16 able income.
17 (b) Add the net operating loss deduction used in arriving at taxable
18 income.
19 (c) (1) A net operating loss for any taxable year commencing on and after
20 January 1, 2000, shall be a net operating loss carryback not to exceed a
21 total of one hundred thousand dollars ($100,000) to the two (2) immedi-
22 ately preceding taxable years. Any portion of the net operating loss not
23 subtracted in the two (2) preceding years may be subtracted in the next
24 twenty (20) years succeeding the taxable year in which the loss arises in
25 order until exhausted. The sum of the deductions may not exceed the amount
26 of the net operating loss deduction incurred. At the election of the tax-
27 payer, the two (2) year carryback may be foregone and the loss subtracted
28 from income received in taxable years arising in the next twenty (20)
29 years succeeding the taxable year in which the loss arises in order until
30 exhausted. The election shall be made as under section 172(b)(3) of the
31 Internal Revenue Code. An election under this subsection must be in the
32 manner prescribed in the rules of the state tax commission and once made
33 is irrevocable for the year in which it is made. The term "income" as used
34 in this subsection (c) means Idaho taxable income as defined in this chap-
35 ter as modified by section 63-3021(b)(2), (3) and (4), Idaho Code.
36 (2) Net operating losses incurred by a corporation during a year in which
37 such corporation did not transact business in Idaho or was not included in
38 a group of corporations combined under subsection (t) of section 63-3027,
39 Idaho Code, may not be subtracted. However, if at least one (1) corpora-
40 tion within a group of corporations combined under subsection (t) of sec-
41 tion 63-3027, Idaho Code, was transacting business in Idaho during the
42 taxable year in which the loss was incurred, then the net operating loss
43 may be subtracted. Net operating losses incurred by a person, other than a
2
1 corporation, in activities not taxable by Idaho may not be subtracted.
2 (d) In the case of a corporation, add the amount deducted under the pro-
3 visions of sections 243(a) and (c), 244, 245 and 246A of the Internal Revenue
4 Code (relating to dividends received by corporations) as limited by section
5 246(b)(1) of said code.
6 (e) In the case of a corporation, subtract an amount determined under
7 section 78 of the Internal Revenue Code to be taxable as dividends.
8 (f) Subtract the amount of any income received or accrued during the tax-
9 able year which is exempt from taxation by this state, under the provisions of
10 any other law of this state or a law of the United States, if not previously
11 subtracted in arriving at taxable income.
12 (g) For the purpose of determining the Idaho taxable income of the bene-
13 ficiary of a trust or of an estate:
14 (1) Distributable net income as defined for federal tax purposes shall be
15 corrected for the other adjustments required by this section.
16 (2) Net operating losses attributable to a beneficiary of a trust or
17 estate under section 642 of the Internal Revenue Code shall be a deduction
18 for the beneficiary to the extent that income from the trust or estate
19 would be attributable to this state under the provisions of this chapter.
20 (h) In the case of an individual who is on active duty as a full-time
21 officer, enlistee or draftee, with the armed forces of the United States,
22 which full-time duty is or will be continuous and uninterrupted for one hun-
23 dred twenty (120) consecutive days or more, deduct compensation paid by the
24 armed forces of the United States for services performed outside this state.
25 The deduction is allowed only to the extent such income is included in taxable
26 income, and provided that appropriate adjustments shall be made in determining
27 the deductions and exemptions allowed pursuant to section 63-3026A(4), Idaho
28 Code.
29 (i) In the case of a corporation, including any corporation included in a
30 group of corporations combined under subsection (t) of section 63-3027, Idaho
31 Code, add any capital loss deducted which loss was incurred during any year in
32 which such corporation did not transact business in Idaho. However, do not add
33 any capital loss deducted if a corporation, including any corporation in a
34 group of corporations combined under subsection (t) of section 63-3027, Idaho
35 Code, was transacting business in Idaho during the taxable year in which the
36 loss was incurred. In the case of persons, other than corporations, add any
37 capital loss deducted which was incurred in activities not taxable by Idaho at
38 the time such loss was incurred. In computing the income taxable to an S cor-
39 poration or partnership under this section, deduction shall not be allowed for
40 a carryover or carryback of a net operating loss provided for in subsection
41 (c) of this section or a capital loss provided for in section 1212 of the
42 Internal Revenue Code.
43 (j) In the case of an individual, there shall be allowed as a deduction
44 from gross income either (1) or (2) at the option of the taxpayer:
45 (1) The standard deduction as defined in section 63, Internal Revenue
46 Code.
47 (2) Itemized deductions as defined in section 63 of the Internal Revenue
48 Code except state or local taxes measured by net income and general sales
49 taxes as either is defined in section 164 of the Internal Revenue Code.
50 (k) Add the taxable amount of any lump sum distribution excluded from
51 gross income for federal income tax purposes under the ten (10) year averaging
52 method. The taxable amount will include the ordinary income portion and the
53 amount eligible for the capital gain election.
54 (l) Deduct any amounts included in gross income under the provisions of
55 section 86 of the Internal Revenue Code relating to certain social security
3
1 and railroad benefits.
2 (m) In the case of a self-employed individual, deduct the actual cost of
3 premiums paid to secure worker's compensation insurance for coverage in Idaho,
4 if such cost has not been deducted in arriving at taxable income.
5 (n) In the case of an individual, deduct the amount contributed to a col-
6 lege savings program pursuant to chapter 54, title 33, Idaho Code, but not
7 more than four thousand dollars ($4,000) per tax year. If the contribution is
8 made on or before April 15, 2001, it may be deducted for tax year 2000 and an
9 individual can make another contribution and claim the deduction according to
10 the limits provided in this subsection during 2001 for tax year 2001, as long
11 as the contribution is made on or before December 31, 2001.
12 (o) In the case of an individual, add the amount of a nonqualified with-
13 drawal from an individual trust account or savings account established pursu-
14 ant to chapter 54, title 33, Idaho Code, less any amount of such nonqualified
15 withdrawal included in the individual's federal gross income pursuant to sec-
16 tion 529 of the Internal Revenue Code.
17 SECTION 2. An emergency existing therefor, which emergency is hereby
18 declared to exist, this act shall be in full force and effect on and after its
19 passage and approval, and retroactively to January 1, 2006.
]]]] LEGISLATURE OF THE STATE OF IDAHO ]]]]
Fifty-eighth Legislature Second Regular Session - 2006
Moved by Smith (24)
Seconded by Crow
IN THE HOUSE OF REPRESENTATIVES
HOUSE AMENDMENT TO H.B. NO. 444
1 AMENDMENT TO SECTION 2
2 On page 3 of the printed bill, in line 19, delete "2006" and insert:
3 "2005".
]]]] LEGISLATURE OF THE STATE OF IDAHO ]]]]
Fifty-eighth Legislature Second Regular Session - 2006
IN THE HOUSE OF REPRESENTATIVES
HOUSE BILL NO. 444, As Amended
BY REVENUE AND TAXATION COMMITTEE
1 AN ACT
2 RELATING TO INCOME TAXES; AMENDING SECTION 63-3022, IDAHO CODE, TO DELETE THE
3 REQUIREMENT THAT RESIDENT MILITARY MEMBERS REDUCE DEDUCTIONS AND EXEMP-
4 TIONS IN PROPORTION TO NONTAXABLE MILITARY PAY; DECLARING AN EMERGENCY AND
5 PROVIDING RETROACTIVE APPLICATION.
6 Be It Enacted by the Legislature of the State of Idaho:
7 SECTION 1. That Section 63-3022, Idaho Code, be, and the same is hereby
8 amended to read as follows:
9 63-3022. ADJUSTMENTS TO TAXABLE INCOME. The additions and subtractions
10 set forth in this section, and in sections 63-3022A through 63-3022Q, Idaho
11 Code, are to be applied to the extent allowed in computing Idaho taxable
12 income:
13 (a) Add any state and local taxes, as defined in section 164 of the
14 Internal Revenue Code and, measured by net income, paid or accrued during the
15 taxable year adjusted for state or local tax refunds used in arriving at tax-
16 able income.
17 (b) Add the net operating loss deduction used in arriving at taxable
18 income.
19 (c) (1) A net operating loss for any taxable year commencing on and after
20 January 1, 2000, shall be a net operating loss carryback not to exceed a
21 total of one hundred thousand dollars ($100,000) to the two (2) immedi-
22 ately preceding taxable years. Any portion of the net operating loss not
23 subtracted in the two (2) preceding years may be subtracted in the next
24 twenty (20) years succeeding the taxable year in which the loss arises in
25 order until exhausted. The sum of the deductions may not exceed the amount
26 of the net operating loss deduction incurred. At the election of the tax-
27 payer, the two (2) year carryback may be foregone and the loss subtracted
28 from income received in taxable years arising in the next twenty (20)
29 years succeeding the taxable year in which the loss arises in order until
30 exhausted. The election shall be made as under section 172(b)(3) of the
31 Internal Revenue Code. An election under this subsection must be in the
32 manner prescribed in the rules of the state tax commission and once made
33 is irrevocable for the year in which it is made. The term "income" as used
34 in this subsection (c) means Idaho taxable income as defined in this chap-
35 ter as modified by section 63-3021(b)(2), (3) and (4), Idaho Code.
36 (2) Net operating losses incurred by a corporation during a year in which
37 such corporation did not transact business in Idaho or was not included in
38 a group of corporations combined under subsection (t) of section 63-3027,
39 Idaho Code, may not be subtracted. However, if at least one (1) corpora-
40 tion within a group of corporations combined under subsection (t) of sec-
41 tion 63-3027, Idaho Code, was transacting business in Idaho during the
42 taxable year in which the loss was incurred, then the net operating loss
43 may be subtracted. Net operating losses incurred by a person, other than a
2
1 corporation, in activities not taxable by Idaho may not be subtracted.
2 (d) In the case of a corporation, add the amount deducted under the pro-
3 visions of sections 243(a) and (c), 244, 245 and 246A of the Internal Revenue
4 Code (relating to dividends received by corporations) as limited by section
5 246(b)(1) of said code.
6 (e) In the case of a corporation, subtract an amount determined under
7 section 78 of the Internal Revenue Code to be taxable as dividends.
8 (f) Subtract the amount of any income received or accrued during the tax-
9 able year which is exempt from taxation by this state, under the provisions of
10 any other law of this state or a law of the United States, if not previously
11 subtracted in arriving at taxable income.
12 (g) For the purpose of determining the Idaho taxable income of the bene-
13 ficiary of a trust or of an estate:
14 (1) Distributable net income as defined for federal tax purposes shall be
15 corrected for the other adjustments required by this section.
16 (2) Net operating losses attributable to a beneficiary of a trust or
17 estate under section 642 of the Internal Revenue Code shall be a deduction
18 for the beneficiary to the extent that income from the trust or estate
19 would be attributable to this state under the provisions of this chapter.
20 (h) In the case of an individual who is on active duty as a full-time
21 officer, enlistee or draftee, with the armed forces of the United States,
22 which full-time duty is or will be continuous and uninterrupted for one hun-
23 dred twenty (120) consecutive days or more, deduct compensation paid by the
24 armed forces of the United States for services performed outside this state.
25 The deduction is allowed only to the extent such income is included in taxable
26 income, and provided that appropriate adjustments shall be made in determining
27 the deductions and exemptions allowed pursuant to section 63-3026A(4), Idaho
28 Code.
29 (i) In the case of a corporation, including any corporation included in a
30 group of corporations combined under subsection (t) of section 63-3027, Idaho
31 Code, add any capital loss deducted which loss was incurred during any year in
32 which such corporation did not transact business in Idaho. However, do not add
33 any capital loss deducted if a corporation, including any corporation in a
34 group of corporations combined under subsection (t) of section 63-3027, Idaho
35 Code, was transacting business in Idaho during the taxable year in which the
36 loss was incurred. In the case of persons, other than corporations, add any
37 capital loss deducted which was incurred in activities not taxable by Idaho at
38 the time such loss was incurred. In computing the income taxable to an S cor-
39 poration or partnership under this section, deduction shall not be allowed for
40 a carryover or carryback of a net operating loss provided for in subsection
41 (c) of this section or a capital loss provided for in section 1212 of the
42 Internal Revenue Code.
43 (j) In the case of an individual, there shall be allowed as a deduction
44 from gross income either (1) or (2) at the option of the taxpayer:
45 (1) The standard deduction as defined in section 63, Internal Revenue
46 Code.
47 (2) Itemized deductions as defined in section 63 of the Internal Revenue
48 Code except state or local taxes measured by net income and general sales
49 taxes as either is defined in section 164 of the Internal Revenue Code.
50 (k) Add the taxable amount of any lump sum distribution excluded from
51 gross income for federal income tax purposes under the ten (10) year averaging
52 method. The taxable amount will include the ordinary income portion and the
53 amount eligible for the capital gain election.
54 (l) Deduct any amounts included in gross income under the provisions of
55 section 86 of the Internal Revenue Code relating to certain social security
3
1 and railroad benefits.
2 (m) In the case of a self-employed individual, deduct the actual cost of
3 premiums paid to secure worker's compensation insurance for coverage in Idaho,
4 if such cost has not been deducted in arriving at taxable income.
5 (n) In the case of an individual, deduct the amount contributed to a col-
6 lege savings program pursuant to chapter 54, title 33, Idaho Code, but not
7 more than four thousand dollars ($4,000) per tax year. If the contribution is
8 made on or before April 15, 2001, it may be deducted for tax year 2000 and an
9 individual can make another contribution and claim the deduction according to
10 the limits provided in this subsection during 2001 for tax year 2001, as long
11 as the contribution is made on or before December 31, 2001.
12 (o) In the case of an individual, add the amount of a nonqualified with-
13 drawal from an individual trust account or savings account established pursu-
14 ant to chapter 54, title 33, Idaho Code, less any amount of such nonqualified
15 withdrawal included in the individual's federal gross income pursuant to sec-
16 tion 529 of the Internal Revenue Code.
17 SECTION 2. An emergency existing therefor, which emergency is hereby
18 declared to exist, this act shall be in full force and effect on and after its
19 passage and approval, and retroactively to January 1, 2005.
REPRINT REPRINT REPRINT REPRINT REPRINT
STATEMENT OF PURPOSE
RS 15373
Current Idaho income tax law permits Idaho residents on
active military duty outside Idaho for at least 120 consecutive
days to deduct their military pay when computing Idaho taxable
income. They are also required to reduce their exemptions and
deductions in proportion to their exempt military income. This
bill repeals the requirement to reduce their exemptions and
deductions.
FISCAL NOTE
Loss to the general fund of $1.5 million.
(Note: Expect the fiscal effect to diminish as mobilizations of
Idaho National Guard and Reserve members declines.)
CONTACT
Name: Dan John
Agency: State Tax Commission
Phone: 334-7530
STATEMENT OF PURPOSE/FISCAL NOTE H 444 AA