Jeff Ehlers — Representative Jeff Ehlers is identified as the presenter and then opens his testimony on HB 559, introducing himself as the representative from District 21 in Meridian and stating that the bill concerns tax conformity.
Jeff Ehlers — Jeff Ehlers explained how the bill treats research and development expenses: historical R&D from 2022 through 2024 remains subject to the existing five-year amortization schedule until those amounts are fully phased out, while new R&D beginning in 2025 can be fully expensed in the year incurred. He also addressed the fiscal note, saying that although the change might appear to have an impact on paper, timing differences between tax years, fiscal years, and cash collections mean the effect should net to zero in FY 2026. He noted that some revenue would be collected back in 2026, but about the same amount would go out under the Delaware model in the same fiscal year, and clarified that he was speaking about the revenue/tax bill rather than recommending budget changes.
Jeff Ehlers — Recognized by the witness for bringing the legislation forward.
Jeff Ehlers — Representative Ehlers was invited to give closing remarks and thanked the chair and public for their testimony. He explained that the bill is about tax conformity and tax policy, not a budget bill or a measure to cut services.
Jeff Ehlers — Voted yes in the roll call.
David Cannon — Representative Cannon, acting as chair, outlined the structure of the hearing, explained that many witnesses had signed up to testify, and reminded the committee that time was limited and the agenda was full.
David Cannon — Addressed as the chair while Mr. Wynn answered a question.
David Cannon — Voted yes in the roll call.
John Gannon — Representative Gannon questioned the sponsor about how R&E expenditures from 2022 through 2024 are amortized over five years, whether the bill’s projected increase reflects those expenditures, and whether the proposal would allow taxpayers to deduct 100% of R&E spending in 2025 instead of spreading it out. He argued that moving from roughly 20% deductibility under current treatment to full deductibility in 2025 would create a fiscal impact, then followed up by asking whether some of that impact would wash out in 2026 when the deductions come back into the calendar year.
John Gannon — John Gannon questioned Ron Nate about the bill’s impact on research and development tax treatment, citing the Freedom Foundation’s analysis that the legislation could save Idaho businesses tens of millions of dollars and primarily benefit entities with research and experimentation expenses or small businesses. He then asked whether the bill provides a benefit for R&D, noting that in 2025 businesses would be able to deduct 100% of R&D expenses instead of 20% in prior years, and pressed the point that this would especially benefit taxpayers with significant R&D.
John Gannon — The chair calls on Representative Gannon for a question.
John Gannon — Asked how much benefit the SALT deduction provides and referenced corporations paying taxes in December to obtain it.
John Gannon — Addressed by the witness in response to his question.
John Gannon — The chair again recognizes Representative Gannon for a follow-up.
John Gannon — Asked whether increasing the SALT deduction from $10,000 to $40,000 benefits Idaho.
John Gannon — Asked whether the bill's change to one-year R&E deduction would be a benefit and whether Mr. Wynn was referring to something different.
John Gannon — Asked whether the bill's 2025 change to immediate R&E deduction would save money.
John Gannon — Asked Ms. Roberts to clarify the three categories of revenue reduction not included in the Tax Commission estimate.
John Gannon — Representative Gannon argued that the committee should not advance the bill until the fiscal impact is better understood, asking for the Idaho Tax Commission’s computation of the $155 million estimate and noting the wide gap between different projections, including the Tax Foundation’s estimate and the State Tax Commission’s numbers. He said the bill was premature without clearer cost information, referenced missing SALT deduction details and prior email requests for that information, and added that while he supports the tips and overtime provisions, he is drafting a separate bill focused on those items.
Vito Barbieri — He asked whether corporate taxpayers deducted R&E after the Big Beautiful Bill in anticipation of not paying the full amount.
Vito Barbieri — Voted yes in the roll call.
Britt Raybould — Representative Britt Raybould asked how the committee’s revenue-setting work fits into the current budget year, whether additional budget cuts might be needed, and whether executive agencies had been directed to identify an additional 1% to 2% in cuts for the current and next fiscal year.
Britt Raybould — Likely Representative Britt Raybould; recorded as aye in the roll call.
James Woodward — Likely intended reference to Senator Groh; the transcript is unclear and the exact member cannot be confirmed from the provided list.
Heather Scott — Representative Ehlers discussed the legislature’s constitutional obligation to pass a balanced budget and pointed to his handout as showing a balanced bottom line. In the same exchange, he confirmed that underpaid taxes would be treated like any other taxpayer’s, with interest and late fees, and said he had read Senator Groh’s remarks while viewing $80 million to $90 million as a reasonable estimate for the R&E. The chair then thanked him and asked him to return to his desk as public testimony began.
Heather Scott — Representative Birch asked about the broader indirect impacts of disability service cuts, including effects on families and the wider community.
Jerald Raymond — Representative Raymond followed up with the sponsor and asked whether back-collected revenues would be subject to interest and late fees, continuing the same discussion about revenue collection and budget-related obligations.
Jerald Raymond — Representative Jerald Raymond thanked the witness and asked about the implications for businesses and employees if companies assumed Idaho would conform to the tax treatment being discussed. The witness responded to Raymond’s question, and the chair then noted that Raymond’s light was still on and asked whether he had a follow-up.
Jerald Raymond — During the roll call, Representative Raymond was reached and voted yes.
Shawn Dygert — Representative Tanner was referenced as one of the legislators who, along with Senator Groh, sent a letter regarding budget cuts and budget intentions.
— Senator Groh is referenced as a co-sender of a letter about budget intentions, then later cited for comments on the bill’s fiscal numbers, including that estimates ranged widely and that no reliable corporate-side figures had been provided. The discussion also notes that Groh worked with the sponsor to dig into and review those numbers.
Mike Moyle — Was addressed by the speaker during the question and answer exchange.
Dan Garner — Representative Gannon asked whether the sponsor was aware of Senator Groh’s remarks and whether those comments affected uncertainty around the corporate-side numbers; the question was then directly addressed in response.
Eleanor Cheney — Eleanor Cheney is introduced as the first testifier and then invited to the podium, where she is asked to introduce herself and her affiliation and indicates she has copies for the committee.
Eleanor Cheehee — Eleanor Cheehee testified on behalf of United Women in Faith, formerly United Methodist Women, and stated opposition to House Bill 559. The chair then thanked her and opened the floor for questions.
Ron Nate — Ron Nate was introduced and then testified in favor of House Bill 559 as president of the Idaho Freedom Foundation. He argued that Idaho’s issue is spending, not revenue, noting that income tax revenues have risen even with tax rate cuts. In response to questions, he said the bill should fully conform to Section 174 and include the research and experimentation deduction, estimating that full conformity would save businesses about $96 million annually. He also argued the state should not pick winners and losers, should apply the benefit broadly, and should conform more fully to federal tax treatment rather than treating provisions differently.
Jason Monks — Jason Monks questioned Ron Nate’s assertion that the bill picks winners and losers. He argued that he did not see anything in the bill preventing any business from taking advantage of the available deductions or opportunities, and suggested that Idaho may simply be doing things differently from the federal government rather than favoring certain businesses.
Jason Monks — Representative Monks thanks the chair and the witness, asks whether seniors may not be seeing a benefit because they are no longer paying taxes, then briefly follows up and indicates he has no further questions.
Jason Monks — Moves to send House Bill 559 to the floor with a due pass recommendation.
Sally Stone — Sally Stone, a retired CPA from Boise testifying on her own behalf, argued that HB 559 would significantly reduce Idaho tax revenue. She cited the Idaho State Tax Commission’s estimate of a $167 million loss from individual income tax cuts and noted that the Tax Foundation separately projected a $117 million corporate tax revenue loss that was not included in the state estimate. She said the combined impact could exceed $250 million and urged the committee to vote no on HB 559.
Ken McClure — Ken McClure introduced himself as a Garden City resident testifying on behalf of the Idaho Society of CPAs, then explained that CPAs and other tax preparers need tax conformity to be completed early so they can file constituents' tax returns on time, noting that the bill is not the version they had hoped to see.
Mr. McClure — Mr. McClure discusses Idaho's conformity with federal tax law, explaining that the state last substantially failed to conform around 2008 when it did not adopt federal bonus depreciation and noting that Idaho does not conform to many federal provisions. He also clarifies that Idaho does conform to the definition of taxable income or adjusted gross income as the starting point for tax calculations before the committee thanks him and dismisses him.
Charlie Shepherd — He asks when the state last failed to conform in any substantial amount.
Charlie Shepherd — Questioned how the bill could be described both as a corporate tax break and as not good for corporations.
Charlie Shepherd — Representative Shepard argued that the tax conformity estimate was only an estimate and that returning money to taxpayers would stimulate economic activity and generate additional, unprojected sales tax revenue that would benefit Idaho taxpayers. Immediately afterward, the committee moved to a roll call vote, in which Shepard voted yes; the vote continued with other members, and Representative Birch noted that the no votes would be recorded, identifying Representatives Gannon and Birch as noes.
Chris Mathias — Representative Gannon is introduced as the next questioner and asks Mr. McClure about federal and state conformity. Mr. McClure responds that they conform to the definition of taxable income or adjust to gross income, continuing the same discussion.
Bonnie McKay-Faff — Bonnie McKay-Faff is introduced and testifies in opposition to House Bill 559, focusing on the senior deduction. She argues that fewer than half of older adults will benefit, that low-income seniors receive no benefit, and that some seniors could also be harmed by safety-net cuts in the bill. She further notes that the highest-income seniors receive limited benefit because of the phase-out, and the discussion ends with a question challenging her claim that half of seniors will not see a benefit.
Ms. Faff — She responds that low-income seniors do not make enough income to qualify for tax relief.
Kathy Tidwell — Kathy Tidwell testifies as a private citizen from Boise and argues against rushing to conform to 2025 changes while the state faces a projected budget deficit and cuts to essential services. She urges lawmakers to postpone the decision until conformity costs are clearer and concludes by asking them to vote no on House Bill 559.
Valerie Slaven — Valerie Slaven testifies in opposition to House Bill 559, saying it would directly and adversely affect her and many Idaho seniors. She explains that the bill provides a $6,000 deduction for Idaho seniors over 65, but only for seniors and senior couples with incomes up to $80,000. She argues that because Idaho does not tax Social Security, many seniors may not meet the income threshold and therefore would not benefit. She concludes that many taxpayers may be forced to amend their returns, creating added expense and burden, and characterizes the bill as rushed and harmful to senior taxpayers.