House callsfor raising credit for grocery tax

The Idaho House of Representatives voted Friday to increase the grocery tax credit Idahoans receive to offset the sales tax collected on food to $155 per year.

Under current law, most Idaho taxpayers receive a tax credit of $120 per year, while seniors receive a credit of $140 per year. House Bill 231 would increase that credit to $155 per year for everybody.

Each Idaho taxpayer who files an individual income tax return is able to claim the credit automatically. Each Idaho taxpayer can also claim the credit for their spouse and each of their dependents. That means that a family of four would receive a credit of $620 per year under House Bill 231, up from the current amount of $480.

The $155 credit would cover about $10,033 worth of groceries per year, or $861 per month for a family of four in Idaho.

House Majority Leader Jason Monks, R-Meridian, co-sponsored the bill.

Monks said he prefers increasing the tax credit while leaving the sales tax on groceries in place because if the state repeals the sales tax on groceries, Idaho would not be able to collect that revenue from the millions of out-of-state visitors and tourists who visit Idaho each year and buy groceries. Monks said increasing the credit helps Idaho families afford to pay their food bills, while still collecting revenue from out-of-state shoppers.

The bill also includes a provision to allow Idaho taxpayers to save and scan all of their receipts each year to claim an itemized credit of up to $250 per year if the $155 does not cover all of their food. However, not all items sold in grocery stores would be subject to the grocery tax credit – soda, candy, heated food, toilet paper, shampoo, cleaning products and many other items sold in grocery stores are not covered by the credit. Food sold in restaurants is not covered by the credit.

Some of the bill’s opponents warned that taxpayers would have to jump through a lot of hoops to claim an itemized credit of up to $250. For example, If a taxpayer chooses to scan their receipts and file for an itemized grocery tax credit, they would have to separate out the sales tax paid on qualifying food items from everything they bought that wasn’t covered by the grocery tax credit, like soda and cleaning products.

It may also be necessary for the taxpayer filing an itemized credit to calculate the flour-to-weight ratio of some items they buy at the grocery store to eat – if an item contains more than 10% flour by weight, it would not be considered candy.

After a long debate, the Idaho House voted 61-6 to pass House Bill 231 on Friday.

The House Revenue and Taxation Committee introduced House Bill 231 on Thursday, about 24 hours before it went up for a vote in front of the full Idaho House on Friday. House Bill 231 replaced House Bill 61, a nearly identical grocery tax credit bill that legislators introduced Jan. 27. The difference between the two bills is the new bill inserts the word “retail” before the word “seller” three different times.

House Bill 231 heads next to the Idaho Senate for consideration.

The legislation is one of three bills that seek to cut a combined $403 million in taxes this year.

House Bill 231 would reduce revenue to the state by $50 million per year, according to the bill’s fiscal note.

House Bill 40, which would reduce the corporate and individual income tax rate from 5.695% to 5.3%, would reduce state revenue by $253 million.

House Bill 74, which sends money to school districts and a homeowners property tax reduction fund, would reduce revenue by $50 million per year and provide an additional one-time transfer of $50 million.

Idaho Capital Sun senior reporter Clark Corbin has more than a decade of experience covering Idaho government and politics.