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LEGISLATURE
OF
THE
STATE
OF
IDAHO
Sixty-eighth
Legislature
Second
Regular
Session
-
2026
IN
THE
HOUSE
OF
REPRESENTATIVES
HOUSE
BILL
NO.
886
BY
REVENUE
AND
TAXATION
COMMITTEE
AN
ACT
1
RELATING
TO
TAXATION;
PROVIDING
LEGISLATIVE
FINDINGS
AND
INTENT;
REPEALING
2
SECTION
63
-
216,
IDAHO
CODE,
RELATING
TO
A
RESTRICTION
ON
STATE
PROPERTY
3
TAX
WHEN
SALES
TAX
IS
IN
FORCE;
AMENDING
CHAPTER
6,
TITLE
63,
IDAHO
CODE,
4
BY
THE
ADDITION
OF
A
NEW
SECTION
63
-
602PP,
IDAHO
CODE,
TO
ESTABLISH
PRO
-
5
VISIONS
REGARDING
EXEMPTIONS
FROM
STATE
PROPERTY
TAX;
AMENDING
SECTION
6
63
-
801,
IDAHO
CODE,
TO
PROVIDE
FOR
AN
ANNUAL
STATE
PROPERTY
TAX
LEVY;
7
AND
PROVIDING
AN
EFFECTIVE
DATE.
8
Be
It
Enacted
by
the
Legislature
of
the
State
of
Idaho:
9
SECTION
1.
LEGISLATIVE
FINDINGS
AND
INTENT.
(1)
The
Legislature
finds
10
that
the
rapid
proliferation
of
non
-
primary
residential
properties
and
1
1
high
-
occupancy
short
-
term
rentals
has
placed
an
unprecedented
and
dispro
-
12
portionate
strain
on
Idaho's
public
safety
infrastructure.
The
increased
13
demand
for
law
enforcement,
emergency
medical
services,
and
fire
protec
-
14
tion,
particularly
in
areas
with
high
seasonal
populations,
frequently
15
outpaces
the
revenue
generated
by
traditional
local
property
tax
struc
-
16
tures.
Furthermore,
the
displacement
of
Idaho's
workforce
by
out
-
of
-
state
17
investment
interests
has
created
a
critical
shortage
of
local
first
respon
-
18
ders
who
can
afford
to
live
in
the
communities
they
serve.
It
is
therefore
19
the
intent
of
the
Legislature
to:
20
(a)
Establish
a
sustainable
revenue
source
dedicated
to
the
funding
of
21
emergency
services
and
law
enforcement;
and
22
(b)
Ensure
that
those
who
utilize
Idaho's
residential
market
for
sea
-
23
sonal
or
investment
purposes
contribute
proportionally
to
the
public
24
safety
systems
that
protect
their
investments.
25
(2)
The
Legislature
finds
that
while
residential
expansion
adds
to
26
the
tax
base,
the
growth
-
related
costs
associated
with
infrastructure,
27
maintenance,
and
the
constitutional
mandate
to
provide
a
"general,
uniform
28
and
thorough
system
of
public,
free
common
schools"
frequently
exceed
the
29
revenue
generated
by
primary
residential
homesteads.
Under
the
current
30
tax
system,
the
financial
burden
of
rapid
growth
falls
unfairly
on
Idaho's
31
long
-
term
residents
and
workforce.
By
distinguishing
between
primary
32
dwellings
and
secondary
residential
investments,
the
state
can
mitigate
33
this
imbalance.
It
is
therefore
the
intent
of
the
Legislature
to:
34
(a)
Utilize
a
state
-
level
levy
on
non
-
primary
residential
properties
35
to
offset
the
increased
financial
obligations
of
the
state
and
its
local
36
taxing
districts
caused
by
rapid
expansion;
and
37
(b)
Direct
revenue
from
such
state
-
level
levy
toward
direct
property
38
tax
credits
for
primary
homesteads,
thereby
lowering
the
tax
burden
for
39
Idaho
citizens.
40
(3)
In
accordance
with
Section
2,
Article
VII
of
the
Constitution
of
41
the
State
of
Idaho,
the
Legislature
hereby
declares
that
this
state
property
42
tax
is
needful
to
ensure
the
long
-
term
viability
of
Idaho's
physical
infra
-
43
2
structure.
The
Legislature
finds
that
the
conversion
of
residential
neigh
-
1
borhoods
into
high
-
turnover
investment
properties
places
unique
stress
on
2
local
road
networks,
water
systems,
and
sewer
facilities
originally
engi
-
3
neered
for
lower
-
intensity
use.
Seasonal
surges
and
high
-
occupancy
periods
4
require
accelerated
maintenance
of
public
thoroughfares
and
necessitate
5
expanding
water
treatment
and
sewage
processing
capacities
to
handle
peak
6
demand.
Because
these
capital
-
intensive
utilities
must
be
maintained
at
7
maximum
capacity
regardless
of
fluctuating
occupancy
rates,
the
costs
of
8
such
readiness
must
be
shared
by
those
driving
the
demand.
It
is
therefore
9
the
intent
of
the
Legislature
to
ensure
that
the
development
and
mainte
-
10
nance
of
roads,
water
systems,
and
sewer
infrastructure
are
funded
through
1
1
a
system
where
secondary
residential
investments
contribute
to
community
12
infrastructure
that
sustains
their
property
value.
13
SECTION
2.
That
Section
63
-
216
,
Idaho
Code,
be,
and
the
same
is
hereby
14
repealed.
15
SECTION
3.
That
Chapter
6,
Title
63,
Idaho
Code,
be,
and
the
same
is
16
hereby
amended
by
the
addition
thereto
of
a
NEW
SECTION
,
to
be
known
and
des
-
17
ignated
as
Section
63
-
602PP,
Idaho
Code,
and
to
read
as
follows:
18
63
-
602PP.
EXEMPTIONS
FROM
STATE
PROPERTY
TAX.
(1)
The
following
prop
-
19
erty
is
exempt
from
the
state
property
tax
authorized
in
section
63
-
801,
20
Idaho
Code:
21
(a)
Personal
property;
22
(b)
Operating
property;
23
(c)
Forest
land
as
defined
in
section
63
-
1701,
Idaho
Code;
24
(d)
Property
primarily
devoted
to
the
exploration,
development,
or
ex
-
25
traction
of
any
mineral
as
that
term
is
defined
in
chapter
7,
title
47,
26
Idaho
Code,
and
any
mining
claims
whether
patented
or
unpatented;
27
(e)
Property
that
qualifies
for
the
exemption
provided
in
section
28
63
-
602G,
Idaho
Code;
29
(f)
Real
property
classified
as
commercial
property,
industrial
prop
-
30
erty,
or
land
actively
devoted
to
agriculture;
31
(g)
Any
additional
residential
property
owned
by
a
natural
person
who
32
is
a
resident
of
the
state
of
Idaho
and
who
has
been
granted
a
homestead
33
exemption
pursuant
to
section
63
-
602G,
Idaho
Code,
for
a
primary
resi
-
34
dence
within
the
state;
however,
this
exemption
shall
not
apply
to
any
35
property
utilized
as
a
short
-
term
rental
for
more
than
thirty
(30)
days
36
in
a
calendar
year,
unless
said
short
-
term
rental
has
a
maximum
occu
-
37
pancy
level
of
six
(6)
or
fewer
individuals;
and
38
(h)
Residential
property
that
is
not
a
primary
homestead
but
is
occu
-
39
pied
by
a
tenant
under
a
long
-
term
lease
of
at
least
seven
(7)
months
and
40
is
not
subleased
by
such
tenant.
41
(2)
Any
person
who
knowingly
provides
false
information
regarding
the
42
occupancy,
use,
or
homestead
status
of
residential
property
to
avoid
the
43
state
property
tax
shall
be
subject
to
the
penalties
for
escaped
assessments
44
as
provided
in
section
63
-
1401,
Idaho
Code,
and
the
recovery
of
back
taxes
45
and
interest
as
provided
in
section
63
-
602G,
Idaho
Code.
46
3
SECTION
4.
That
Section
63
-
801,
Idaho
Code,
be,
and
the
same
is
hereby
1
amended
to
read
as
follows:
2
63
-
801.
ANNUAL
STATE
PROPERTY
TAX
LEVY
-
-
STATE
PROPERTY
TAX
FUND
-
-
3
COLLECTION
AND
DISTRIBUTION
.
(1)
The
county
commissioners
in
each
county
in
4
this
state
must
meet
on
the
second
Monday
of
September
in
each
year
to
as
-
5
certain
the
tax
rate
necessary
to
be
levied
on
each
dollar
of
the
valuation
6
of
all
the
taxable
property
in
the
county
for
such
year
in
order
to
raise
the
7
amount
of
state
taxes
apportioned
to
such
county
by
the
state
tax
commission.
8
The
total
of
all
levies
must
be
within
the
limits
prescribed
by
the
laws
of
9
this
state.
10
(2)
In
any
period
during
which
a
sales
tax
is
in
force
in
this
state,
1
1
there
shall
be
no
levy
of
the
general
state
property
tax
permitted
by
section
12
9,
article
VII,
of
the
constitution
of
the
state
of
Idaho.
There
is
hereby
13
levied
a
state
property
tax
on
real
and
personal
property
not
otherwise
ex
-
14
empted
by
section
63
-
602PP,
Idaho
Code,
as
follows:
15
(a)
The
rate
of
such
tax
shall
be
two
and
one
-
half
(2.5)
mills
on
each
16
dollar
of
the
taxable
value
of
all
real
and
personal
property
subject
to
17
such
tax;
and
18
(b)
The
county
treasurer
shall
collect
the
state
property
tax
imposed
19
pursuant
to
this
section
in
the
same
manner
as
other
property
taxes
pur
-
20
suant
to
section
63
-
901,
Idaho
Code,
and
all
revenues
collected
from
the
21
state
property
tax
shall
be
remitted
to
the
state
treasurer
for
deposit
22
into
the
state
property
tax
fund.
23
(3)
There
is
hereby
created
in
the
state
treasury
the
state
property
tax
24
fund.
The
fund
shall
consist
of
moneys
deposited
into
it
pursuant
to
this
25
section,
and
such
moneys
are
continuously
appropriated
to
be
distributed
by
26
the
state
tax
commission
to
taxing
districts
as
provided
in
this
section.
27
The
funds
shall
be
distributed
by
the
state
tax
commission
to
taxing
dis
-
28
tricts
within
the
county
where
the
taxes
were
collected
as
follows:
29
(a)
Fifty
percent
(50%)
of
funds
collected
within
such
county
shall
30
be
distributed
to
the
county
and
the
cities
and
fire
districts
therein
31
to
be
used
exclusively
to
fund
law
enforcement
services,
fire
pro
-
32
tection
services,
and
emergency
medical
services.
Such
funds
shall
33
be
allocated
in
proportion
to
each
entity's
share
of
the
total
public
34
safety
-
related
expenses
of
the
county
and
all
cities
within
the
county.
35
For
the
purposes
of
this
paragraph,
"public
safety
-
related
expenses"
36
means
the
sum
of
any
revenue
raised
from:
37
(i)
A
county
levy
pursuant
to
section
63
-
805,
Idaho
Code,
to
the
38
extent
such
revenues
are
expended
for
sheriff
services,
jails,
39
fire
services,
or
ambulance
services;
40
(ii)
An
ambulance
service
district
levy
pursuant
to
section
41
31
-
3901,
Idaho
Code;
42
(iii)
Any
fire
protection
district
levy
pursuant
to
chapter
14,
43
title
31,
Idaho
Code;
44
(iv)
A
city
general
fund
levy
pursuant
to
section
50
-
235,
Idaho
45
Code,
to
the
extent
such
revenues
are
expended
for
police
ser
-
46
vices,
fire
services,
or
ambulance
services;
and
47
(v)
A
city
police
retirement
levy
pursuant
to
section
50
-
1512,
48
Idaho
Code;
49
4
(b)
Thirty
percent
(30%)
of
funds
collected
within
such
county
shall
1
be
returned
to
the
county
for
the
purpose
of
providing
a
direct
credit
2
against
the
property
taxes
due
for
homeowners
receiving
the
homestead
3
exemption
provided
in
section
63
-
602G,
Idaho
Code,
located
within
such
4
county.
The
state
tax
commission
shall
calculate
a
flat
-
dollar
credit
5
amount
by
dividing
the
total
amount
of
funds
allocated
to
the
county
6
pursuant
to
this
paragraph
by
the
total
number
of
properties
receiv
-
7
ing
the
homestead
exemption
in
such
county
to
determine
the
amount
of
8
the
credit
to
be
applied
to
each
property
receiving
the
homestead
ex
-
9
emption.
Such
credit
shall
be
applied
to
the
property
taxes
due
for
10
each
homeowner
entitled
to
a
credit,
and
if
the
amount
of
the
credit
is
1
1
greater
than
the
amount
of
property
taxes
due,
the
balance
shall
be
paid
12
to
the
homeowner;
and
13
(c)
Twenty
percent
(20%)
of
funds
collected
within
such
county
shall
14
be
distributed
to
the
county
and
the
cities
therein
to
be
used
exclu
-
15
sively
to
fund
infrastructure,
capital
expenditures,
and
maintenance
16
costs
related
to
the
following
services:
roads,
water,
sewer,
fire
pro
-
17
tection,
ambulance,
and
public
safety.
Such
funds
shall
be
allocated
to
18
the
county
and
the
cities
within
the
county
in
proportion
to
their
re
-
19
spective
shares
of
the
total
property
tax
portion
of
the
budgets
cer
-
20
tified
for
the
county
and
each
city
within
the
county
for
the
tax
year.
21
Counties
and
cities
that
do
not
provide
these
services
may
remit
such
22
funds
to
the
governmental
entity
that
provides
the
listed
services.
23
(4)
Amounts
distributed
to
cities
and
counties
pursuant
to
this
section
24
shall
not
be
included
in
the
amount
of
property
tax
revenues
to
finance
an
25
annual
budget
for
the
purposes
of
sections
63
-
802
and
63
-
803,
Idaho
Code,
and
26
shall
not
be
used
in
computing
the
limitations
on
increases
in
property
tax
27
revenues
provided
in
section
63
-
802,
Idaho
Code.
28
(5)
The
state
tax
commission
shall,
subject
to
legislative
approval,
29
establish
rules
to
carry
out
the
provisions
of
this
section.
30
SECTION
5.
This
act
shall
be
in
full
force
and
effect
on
and
after
Jan
-
31
uary
1,
2027.
32