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IdahoH 07332026 regular legislative sessionHouseWALLET

TAXATION – Amends and adds to existing law to revise provisions regarding the taxation of partnership income.

Sponsored By: REVENUE AND TAXATION COMMITTEE

Signed by Governor

TAXATION

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Bill Overview

Analyzed Economic Effects

3 provisions identified: 0 benefits, 0 costs, 3 mixed.

Longer timelines after federal tax changes

If a final federal change affects your Idaho income or credits, Idaho reopens its audit and refund windows. The window stays open until the later of one year after the federal final date, three years from the return due date, or three years from when you filed. After the general limits expire, Idaho can adjust only the items changed by the federal adjustment, unless you and the state agree otherwise. You must notify Idaho in writing within 180 days of a final IRS decision or another state’s final income tax decision that affects your Idaho tax, or you face a negligence penalty. The clock pauses while a state notice case is open. Beginning July 1, 2026, these timing rules apply.

Refund and credit deadlines and carrybacks

Beginning July 1, 2026, refund claims are due by the later of three years from the return due date or three years from when you filed. Credit claims are due by the later of ten years from the due date or ten years from filing. Overpayments are first used to pay any other taxes you owe; any leftover is refunded. For withheld, estimated, or backup withholding amounts, refunds follow the three‑year rule and credits the ten‑year rule; disaster relief days under federal law extend the refund window for qualifying individuals. You get a special claim window for net operating loss carrybacks from years starting in 2012 or earlier, and for capital loss carrybacks: file by the 15th day of the 40th month after the loss year ends. If a timely adjustment changes a credit or loss used in another year, that other year can be adjusted and you may claim a refund even if it would otherwise be late. A duplicate return gives at least one year to claim. If a pass‑through extends its limitation period, partners get the same extension for claims tied to those adjustments.

New partnership audit and payment rules

Partnerships must act fast after an IRS change. Within 90 days, the partnership files a report with Idaho and tells each direct partner their share. Within 180 days, direct partners pay Idaho tax on their share, unless the partnership elects to pay instead. An audited partnership can elect to pay the Idaho tax for partners; it files the election within 90 days and pays within 180 days. If the partnership pays, partners cannot also claim a deduction or refund in Idaho for the same tax, though resident partners may still claim credit for taxes paid to other states. The election does not cover amounts that must be in a corporate partner’s unitary income (if the amount can be determined) or adjustments from administrative adjustment requests. If the partnership does not report or pay, the state may assess direct or indirect partners using the best information it has. Filing on time limits how long Idaho can assess. Taxpayers under federal audit may make estimated Idaho payments now and get credit later; refunds require a timely claim. The partnership’s state representative speaks for the whole partnership. Very large partnerships (10,000+ direct partners) get an automatic 60‑day extension by written notice. Beginning July 1, 2026, these rules apply.

Sponsors & Cosponsors

Sponsor

  • REVENUE AND TAXATION COMMITTEE

    Affiliation unavailable

Cosponsors

  • Jeff Ehlers

    Republican • House

  • C. Scott Grow

    Republican • Senate

Roll Call Votes

All Roll Calls

Yes: 99 • No: 0

Senate vote • 3/17/2026

Senate Floor Vote

Yes: 34 • No: 0

House vote • 3/3/2026

House Floor Vote

Yes: 65 • No: 0

Actions Timeline

  1. Reported Signed by Governor on March 20, 2026 Session Law Chapter 81 Effective: 07/01/2026

    3/23/2026

  2. Delivered to Governor at 2 p.m. on March 19, 2026

    3/19/2026

  3. Returned Signed by the President; Ordered Transmitted to Governor

    3/19/2026Senate

  4. Signed by President; returned to House

    3/18/2026Senate

  5. Received from the House enrolled/signed by Speaker

    3/18/2026Senate

  6. Reported Enrolled; Signed by Speaker; Transmitted to Senate

    3/18/2026House

  7. Returned from Senate Passed; to JRA for Enrolling

    3/17/2026House

  8. Read third time in full – PASSED - 34-0-1

    3/17/2026Senate

  9. Read second time; filed for Third Reading

    3/13/2026Senate

  10. Reported out of Committee with Do Pass Recommendation; Filed for second reading

    3/12/2026Senate

  11. Introduced, read first time; referred to: Local Government & Taxation

    3/4/2026Senate

  12. Received from the House passed; filed for first reading

    3/4/2026Senate

  13. Read Third Time in Full – PASSED - 65-0-5

    3/3/2026House

  14. U.C. to hold place on third reading calendar one legislative day

    3/2/2026House

  15. Read second time; Filed for Third Reading

    2/27/2026House

  16. Reported out of Committee with Do Pass Recommendation, Filed for Second Reading

    2/26/2026House

  17. Reported Printed and Referred to Revenue & Taxation

    2/20/2026House

  18. Introduced, read first time, referred to JRA for Printing

    2/19/2026House

Bill Text

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