CONFORMITY TO FEDERAL INTERNAL REVENUE
CODE
2006
Idaho law conforms to the Internal Revenue Code (IRC) as of Jan. 1, 2007.
Once Idaho conforms to the IRC, it follows the federal effective date of any
federal changes adopted, including any retroactive dates. See House Bill
16 signed by the Governor on Feb. 14, 2007.
2005
New Federal Law—Additional
Tax Exemptions for Housing Victims of Hurricane Katrina
The Katrina Emergency Tax Relief Act of 2005, signed by the President on Sept.
23, 2005, provides various tax benefits, including exemptions for housing
Hurricane Katrina displaced individuals.
2004
New Federal Law—General Sales Tax Deduction
The American Jobs Creation Act of 2004, signed by the President on Oct. 22, 2004, allows
taxpayers to deduct state and local sales taxes instead of state and local income taxes as
itemized deductions on the 2004 Federal Form 1040, Schedule A.Idaho did not adopt this change to federal law. House Bill 10 requires sales tax claimed
as an itemized deduction to be treated the same as income tax. The law requires the sales
tax deducted to be added back to Idaho income. Taxpayers should add back the sales tax
claimed as an itemized deduction on line 16 of Form 40 or line 37 of Form 43.
2003
Changes to the IRC during 2003 included those made by the Jobs and
Growth Tax Relief Reconciliation Act of 2003 (Public Law 108-27) and the Military
Tax Relief Act of 2003 (Public Law 108-121).Changes adopted by Idaho as a result of the Jobs and Growth Tax Relief
Reconciliation Act of 2003 include the following modifications to IRC Section 179:
- Increasing the amount that can be expensed to $100,000 for property placed
in service in taxable years beginning in 2003, 2004, and 2005;
- Annual indexing for inflation of dollar limitations; and
- Allowing off-the-shelf-computer software as an asset qualified for the expensing.
Changes not adopted by Idaho in the Jobs and Growth Tax Relief
Reconciliation Act of 2003 include:
- Increasing the additional first-year depreciation from 30% to 50% and
extending it through Dec. 31, 2004. Idaho does not allow either the 30% or the
50% bonus depreciation.
The Military Tax Relief Act of 2003 provided various tax breaks for U.S.
military personnel. These changes were adopted by Idaho and include:
- Expanding the ownership and use time period for an exclusion of gain
from the sale of a principal residence by members of the uniformed services or the
U.S. Foreign Service, effective for sales after May 6, 1997;
- Increasing the exclusion of death gratuity payments (which would double to
$12,000) from gross income with respect to deceased members of the military, effective
for deaths after Sept. 10, 2001;
- Allowing an above-the-line income tax deduction for the overnight travel
expenses of National Guard and Reserve members, effective for tax years starting
after Dec. 31, 2002; and
- Extending the Terrorism Tax Relief Act of 2001 to the families of astronauts
who die while on a mission.