All Roll Calls
Yes: 99 • No: 0
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
5 provisions identified: 2 benefits, 1 costs, 2 mixed.
Members get credit for entity taxes
Starting July 1, 2026, each non‑exempt member gets a credit equal to their pro rata share of tax the entity paid. For individuals, the credit is refundable if it is bigger than the Idaho tax due. Corporate and pass‑through members apply the credit after other credits and can get refunds for any leftover amount. Shares for exempt‑entity members are excluded.
New entity-level tax for pass-throughs
Starting July 1, 2026, partnerships and S corporations can elect each year to pay Idaho tax at the entity level. The entity pays tax on Idaho‑source business income after Idaho adjustments using the corporate rate, then applies allowed credits. Net operating losses do not pass through in electing years; the entity carries them forward while it keeps electing. Each electing entity must give members an annual report of each member’s pro rata tax share, excluding exempt members. Usual Idaho penalties, interest, liens, and collection rules apply to this tax.
180-day deadline for partnership audit taxes
Starting July 1, 2026, taxpayers must report final federal partnership adjustments to Idaho and pay any extra Idaho tax within 180 days of the federal final determination date. This covers IRS audits, amended federal returns, and administrative adjustment requests. The rule does not apply when the partnership elected the entity‑level tax for that year.
More time to notify; longer collections
Starting July 1, 2026, you have 180 days to tell Idaho about a final federal tax change or another state’s change you claim as a credit. Missing this notice can lead to a negligence penalty. When a federal decision changes your Idaho income or credits, Idaho can issue a deficiency up to the later of one year after it receives the federal notice or three years from your return’s due date or filing date. After Idaho records an assessment, the state can collect it for up to 12 years by levy or court action.
Nonresidents may skip Idaho return
Starting July 1, 2026, a nonresident member does not have to file an Idaho return if their only Idaho‑source income is from one or more affected entities. Those entities must file and pay the entity‑level tax on time. If you file a joint federal return, the same rule applies only if the couple’s only Idaho income is from those entities.
Sponsors & Cosponsors
Sponsor
REVENUE AND TAXATION COMMITTEE
Affiliation unavailable
Cosponsors
Jeff Ehlers
Republican • House
C. Scott Grow
Republican • Senate
Roll Call Votes
House vote • 3/17/2026
House Floor Vote
Yes: 34 • No: 0
House vote • 3/3/2026
House Floor Vote
Yes: 65 • No: 0
Actions Timeline
Reported Signed by Governor on March 20, 2026 Session Law Chapter 81 Effective: 07/01/2026
3/23/2026Returned Signed by the President; Ordered Transmitted to Governor
3/19/2026HouseReported Enrolled; Signed by Speaker; Transmitted to Senate
3/18/2026HouseRead third time in full – PASSED - 34-0-1
3/17/2026HouseRead second time; filed for Third Reading
3/13/2026HouseReported out of Committee with Do Pass Recommendation; Filed for second reading
3/12/2026HouseReceived from the House passed; filed for first reading
3/4/2026SenateRead Third Time in Full – PASSED - 65-0-5
3/3/2026HouseU.C. to hold place on third reading calendar one legislative day
3/2/2026HouseRead second time; Filed for Third Reading
2/27/2026HouseReported out of Committee with Do Pass Recommendation, Filed for Second Reading
2/26/2026HouseReported Printed and Referred to Revenue & Taxation
2/20/2026HouseIntroduced, read first time, referred to JRA for Printing
2/19/2026House
Bill Text
Bill Text
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