The cost of doing business is going down in Idaho under a bill signed today by Governor Little. Relating to the taxes charged for Unemployment Insurance, HB 428 was adopted by a vote of 69-1 in the House and 35-0 in the Senate.
According to the fiscal note for HB 428:
“The legislation reduces the multiplier from 1.3 to 1.2, resulting in $44 million in net savings to employers in the first year. By the end of five years the reduced multiplier would provide an estimated $117 million in tax savings. The new multiplier of 1.2 will establish a target reserve balance equivalent to 14.4 months of benefit payments at levels similar to the Great Recession. Lowering the multiplier will have no impact on the Idaho State General Fund, any dedicated fund or federal funds.”
Governor Little said in a press release:
"Idaho has the strongest economy in the nation, putting us in the enviable position of being able to change the unemployment insurance tax formula to save employers money while maintaining a solvent trust fund. We are on pace to deploy $3.7 billion in tax relief since I took office in 2019, with even more on the way. Idaho is proud that we have delivered more tax relief per capita than any other state while making meaningful investments in schools, roads, and infrastructure."
Additional tax relief is likely to be enacted this year. Lawmakers are also currently considering HB 521 (Tax relief and school facilities funding). Along with providing additional funding and accountability mechanisms for the school facilities funding, HB 521 would continue the state’s ongoing income tax rate reduction efforts to help improve regional economic competitiveness.
The combined corporate and personal income tax relief proposed under HB 521 is estimated to be around $59.1 million for Fiscal Year 2025. According to the Tax Foundation, moving from a 5.8% to a 5.695% individual income tax rate would help improve Idaho’s ranking from 33 to 29 for all states and from 24 to 20 for those states where wage income is taxable.
From Unemployment Insurance tax reductions to additional income tax relief, Idaho continues to put out the “Open for Business” sign.