Idaho lawmakers eye tax exemptions

BOISE — Two small tax exemptions for shortline railroads and homeowners were introduced without comment Tuesday by the House Revenue and Taxation Committee.

The first, sponsored by Rep. Clark Kauffman, R-Filer, is intended to incentivize capital investments in Idaho’s shortline railroad systems. It provides a 40 percent income tax credit for costs incurred in reconstructing, replacing, maintaining or expanding railroad infrastructure, including rail lines, bridges and sidings.

Kauffman noted that the tax credit is capped at $3,500 per mile of rail line owned or leased by the company in Idaho.

“If the tax credit isn’t used, it can be transferred one time to a customer or vendor of the railroad,” he said. “Any money received from that transfer must (be reinvested) in the rail infrastructure.”

The proposed tax credit includes a five-year sunset clause, Kauffman said. That way, the Legislature can review it in the future to see if it’s achieving the desired results.

Shortline railroads have about 885 miles of line within Idaho. Given the $3,500 cap, the maximum cost of this credit would be $3.1 million per year.

The committee also introduced a new homeowner’s exemption proposed by Sen. Grant Burgoyne, D-Boise.

Burgoyne noted that newly constructed and occupied residential property isn’t subject to property tax in the year it’s constructed. Instead, it’s subject to an occupancy tax.

Unlike the property tax, he said, the occupancy tax isn’t eligible for a disabled veteran tax exemption or the circuit breaker exemption. The circuit breaker provides a tax break for certain low-income homeowners, including seniors, widows and widowers, some disabled individuals and orphans younger than age 18.

“This legislation is my attempt to fix what was either a deliberate policy decision or an oversight with respect to how the circuit breaker and disabled veteran exemptions are applied,” Burgoyne said.

If approved, the measure would make the occupancy tax eligible for the disabled veteran and circuit breaker exemptions, he said. The separate homeowner’s exemption already applies to the occupancy tax, as well as the property tax.

The State Tax Commission estimates that the bill would cost about $68,000 per year.

Both exemptions will come back to the committee for public hearings.

Spence may be contacted at bspence@lmtribune.com or (208) 791-9168.