Idaho Faces $555K Bill to Implement New Tax Changes

State tax agency says it will need additional funding to adopt 39 federal tax provisions retroactively.

Published on Feb. 12, 2026

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The Idaho State Tax Commission has informed lawmakers that implementing the tax cuts included in the federal One Big Beautiful Bill Act will cost the state $555,000. The agency says the changes, which are retroactive to 2025, will require extensive internal programming, vendor testing, and public education efforts that were not accounted for in the original fiscal note for the state's tax conformity bill.

Why it matters

The additional administrative costs come as the state tax agency is already facing budget cuts, raising concerns about delays in processing tax returns and refunds. The situation highlights the challenges states can face in quickly adopting complex federal tax changes, especially when they are applied retroactively.

The details

According to a memo from Idaho State Tax Commission Chairman Jeff McCray, the $555,000 in estimated costs includes $280,000 for internal programming changes, $125,000 for vendor testing, $115,000 for internal testing and scanning upgrades, and $35,000 for educating the public about the changes. McCray warned lawmakers that without additional funding, the agency may struggle to implement the tax cuts and could face delays in issuing refunds.

  • The federal One Big Beautiful Bill Act was signed into law on Tuesday.
  • The Idaho tax conformity bill, House Bill 559, was approved by the House on February 3 and the Senate on February 5.
  • The Idaho State Tax Commission submitted its cost estimate memo to lawmakers on February 2.

The players

Idaho State Tax Commission

The state agency responsible for overseeing tax collection and administration in Idaho.

Jeff McCray

Chairman of the Idaho State Tax Commission.

Rep. Jeff Ehlers

The sponsor of the Idaho tax conformity bill, House Bill 559.

Sen. Scott Grow

Co-chair of the Joint Finance-Appropriation Committee, which oversees the state budget.

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What they’re saying

“Conforming to the 39 provisions of the OBBBA retroactively means we must perform all that work again and attempt to mitigate the effect by extraordinary means and additional costs.”

— Jeff McCray, Chairman, Idaho State Tax Commission (Idaho Capital Sun)

“The commission's position has always been what is articulated in the memo.”

— Julie Eavenson, Spokesperson, Idaho State Tax Commission (Idaho Capital Sun)

What’s next

The Idaho State Tax Commission may need to seek a supplemental budget request from the state legislature to cover the additional $555,000 in costs. The Joint Finance-Appropriation Committee, which oversees the state budget, will need to decide whether to approve any such request.

The takeaway

This situation highlights the challenges states can face in quickly adopting complex federal tax changes, especially when they are applied retroactively. It also underscores the importance of thorough fiscal analysis and transparency when passing legislation that impacts state budgets and operations.