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More property tax relief possible this year in Idaho

Depending on the spending decisions of Idaho’s local governments, property tax relief could be even higher this year as a result of a $99 million dollar positive state budget balance as Idaho closed the 2023 Fiscal Year. Tax legislation adopted this year by the legislature directs these savings to be earmarked for property tax relief. Although Idaho does not have nor spend property taxes at the state level, enacted HB 292 directs local property tax relief in the following ways:

“This legislation provides immediate and long term property tax relief to all property tax payers in Idaho. The first year of the bill will provide up to $355 million dollars in property tax relief. The second and third year, approximately $110 million be used to reduce property taxes for owner occupied tax payers; approximately $100 million will be used to reduce property taxes for all property tax payers; and another approximate $100 million will be distributed to school districts on an average daily attendance basis. School districts are required to use funds in the order of priority as follows: (1) payment of school bonds (2) payment of school levies (3) saved for future school facility construction needs (4) used for new bonds. This legislation also eliminates the March date that school districts can use for elections. Circuit breaker criteria are also relaxed to allow more people to qualify.”

As reported by the Idaho Capital Sun:

“The $99.1 million surplus will be combined with $205 million in funding already earmarked for property tax reductions through House Bill 292 to total about $300 million in property tax reductions, Little said.
Idaho homeowners will see their property tax credit when they receive their property tax bill this November, Little said.
The amount of property tax reductions Idahoans will receive will vary based on the county and taxing districts their home is located in and the home’s assessed valuation . . .
The new $99.1 million surplus will be broken down in three ways, Adams said.
$50 million will go directly to the homeowner’s property tax relief fund. $24.5 million will go to school districts facilities, which are paid for with property tax dollars. $24.5 million will be distributed to counties based on the proportion of property tax each county levies to offset property taxes.”

Idaho House Speaker Mike Moyle explained in the Statesman that the actual level of property tax relief received will depend on the fiscal discipline of local governments:

“Moyle noted that local governments, not the state, collect property taxes. He encouraged property owners to attend budget-setting hearings with local government leaders in the coming weeks. City and county leaders are preparing budgets before the start of their fiscal year on Oct. 1.
‘If they raise those budgets, some of your relief will go away,’ Moyle said.”

The ongoing tax relief in Idaho has been possible due to a combination of the state’s strong fiscal framework and prioritizing the needs of taxpayers. Governor Little’s press release noted:

Idaho leads the nation in delivering historic tax relief for our people. In addition to the property tax relief announced today, the State of Idaho has turned back $2.7 billion in tax cuts to the people of Idaho since Governor Little took office in 2019 – more than any other state per capita. The tax cuts included a new, lower flat income tax, lower payroll taxes for Idaho businesses, and an enhanced grocery tax credit.

Now the focus will shift to local governments and if they allow taxpayers to receive the full amount of property tax relief or instead will eat into it with increased spending.

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