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January 19, 2018
Federal Tax Reform – Idaho Impact
The potential effect of federal tax reform for Idaho
On December 22, 2017, the President signed into law the Tax Cuts and Jobs Act. This legislation includes
provisions that will impact Idaho taxpayers in both 2017 and 2018. Those provisions will require careful
consideration by the 2018 Idaho Legislature to determine the effect on Idaho taxpayers.
Because Idaho’s Income Tax Code uses the Internal Revenue Code (IRC) as a starting point, Idaho’s income tax
returns begin with the federal adjusted gross income (AGI). Historically, Idaho lawmakers have generally
conformed to the IRC on an annual basis except for the Bonus Depreciation and Net Operating Loss provisions.
Idaho Conformity: Because Idaho conforms to the federal calculation of taxable income:
a. Any changes that affect these calculations will impact the Idaho return and Idaho revenue.
i. Idaho will study any change and decide whether or not to conform.
b. Any changes that affect only the federal tax rates or credits will have no impact on the Idaho
return or Idaho revenue.
2. No Idaho Impact: The following changes only affect the federal tax rates or credits and will have no
impact on the Idaho income tax return or Idaho revenue.
a. Tax brackets.
b. Corporate tax rate.
c. Alternative Minimum Tax.
d. Any of the federal credits, both business and individual.
e. Federal Net Operating Loss (NOL)
Idaho doesn’t currently conform to federal NOL.
f. Bonus depreciation rules – immediate expensing.
Idaho doesn’t currently conform to federal bonus depreciation.
Tax Year 2017 Conformity
1. Retroactive Provisions - Individuals: The implementation date of federal reform affects state tax
administration. For individuals, the tax reform areas mainly impact tax year 2018 except for the
threshold for itemizing medical expenses. The federal change to itemized medical expense deductions
(reduces the threshold for