Idaho Enacts Largest Income Tax Cut in State History

Idahoans will be enjoying another monster reduction in their tax bill, largely thanks to the tireless work of Speaker Mike Moyle. This year’s income tax cut, HB 40, marks the fourth such bill signed by Gov. Brad Little and brings Idaho’s flat 5.695% rate down to a clean 5.3%.

That $253 million cut weighs in as the largest income tax cut in state history.

“This income tax cut is a major win that will make Idaho an even more attractive state in which to live, work, and raise a family,” said Grover Norquist, president of Americans for Tax Reform. “By leaving another quarter-billion dollars in the hands of taxpayers who earned it, Speaker Moyle and Governor Little are strengthening Idaho’s economy and restating Idaho’s admirable commitment to limited government.”

Thanks to the support of Senate President Pro Tem Kelly Anton and Tax Committee Chairman Doug Ricks, the bill sailed through both chambers at a breakneck pace, making Idaho the second state in 2025 to pass an income tax cut. (Kentucky enacted a half-point cut last month.)

“This is the people’s money, not ours in government,” noted Speaker Moyle, who has championed income tax relief for decades. “Giving back the people’s money has always been and will remain a top priority of mine as Speaker.”

The success of HB 40 launches Idaho back into the race to lower and eliminate income taxes across the country. In next-door Montana, Gov. Gianforte hopes to cut the top rate from 5.9% to 4.9%, while Utah looks to move from 4.55% to 4.5%. Gov. Kehoe and legislative leadership in Missouri are on a mission to go all the way to zero via revenue triggers. Kansas is looking to trigger from 5.58% down to 4.5%, potentially overriding Democrat Gov. Laura Kelly in the process after boosting their supermajorities last November. And lawmakers in at least 10 states around the country are seriously considering additional income tax relief, continuing a years-long trend of slashing rates.