Idaho Adopts Nearly All Federal Tax Changes in 'Big, Beautiful Bill'

Governor signs bill conforming state taxes, but budget cuts raise concerns about delays and costs.

Published on Feb. 12, 2026

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Idaho Governor Brad Little has signed a bill that conforms the state's taxes to the changes made in the federal 'One Big Beautiful Bill Act'. The bill is expected to reduce Idaho's revenue by $155 million this fiscal year and $175 million in fiscal year 2027, but it also includes corporate tax benefits and provisions to benefit individual taxpayers. However, the tax commission will need to immediately redesign forms and update software, which may lead to delays in issuing refunds and payments due to recent budget cuts across state agencies.

Why it matters

Tax conformity is important for Idaho taxpayers to take advantage of the federal tax changes, but the state's budget challenges and agency cuts raise concerns about the implementation and potential delays in processing returns and issuing refunds.

The details

House Bill 559 adopts nearly all the same tax cuts included in the federal 'One Big Beautiful Bill Act', such as no taxes on workers' tips, no taxes on overtime for some employees, an enhanced deduction for seniors, and full deduction on eligible research and experimentation expenses starting in 2025. The bill is retroactive to January 1, 2025, meaning the write-offs and other incentives are applicable to returns currently being filed by Idaho taxpayers. However, the tax commission was not provided any additional funding to implement the changes, and recent 3% budget cuts to the agency may lead to reduced temporary tax season staff and delays.

  • House Bill 559 was signed into law by Idaho Governor Brad Little on February 11, 2026.
  • The tax changes in the bill are retroactive to January 1, 2025.
  • The current fiscal year in Idaho ends on June 30, 2026.

The players

Brad Little

The Governor of Idaho who signed House Bill 559 into law.

Jeff Ehlers

A Republican state Representative who sponsored House Bill 559.

Scott Grow

A Republican state Senator who sponsored House Bill 559.

Jim Guthrie

The only Republican state Senator to vote against House Bill 559, opposing the partial conformity on research and experimentation deductions.

Idaho State Tax Commission

The state agency responsible for implementing the tax changes in House Bill 559, which may face delays and challenges due to recent budget cuts.

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What they’re saying

“In my opinion, we should rip the Band-Aid off now and fully conform.”

— Jim Guthrie, State Senator (Idaho Capital Sun)

What’s next

The across-the-board budget cuts for the current fiscal year in Idaho will go before the state House and Senate for a vote.

The takeaway

While Idaho has adopted nearly all the federal tax changes to benefit taxpayers, the state's budget challenges and agency cuts raise concerns about the implementation and potential delays in processing returns and issuing refunds, highlighting the complex tradeoffs involved in tax conformity legislation.