Idaho lawmakers have unveiled a new proposal to adopt tax cuts from the federal One Big Beautiful Bill Act — but the new bill appears to still place the state in a tight budget situation and its total cost is unknown.

Rep. Jeff Ehlers, R-Meridian, on Thursday proposed a new bill that would conform to nearly all the tax changes from the massive federal tax-and-spend bill approved by Congress in July. The House Revenue and Taxation Committee voted to introduce the bill, which will allow it to return for a public hearing.

If Idaho adopts the income tax deductions, many taxpayers will see added benefits, but the state will need to pursue more budget cuts to be able to afford the additional lost revenue.

“We’re all making fiscal projections, but I believe it can give us less heartburn in the current budget,” Ehlers told reporters on Thursday.

He said the new proposal will mitigate some of the uncertainty around how the corporate tax deduction for research and experimentation would affect the state budget in the current fiscal year, which ends June 30.

Each year, the Legislature must approve an annual tax conformity bill, which aligns Idaho’s tax code with the federal Internal Revenue Code. However, with the significant tax deductions included in the federal code this year, as well as the retroactive application to 2025 taxes, these changes will have a significant and immediate budget impact.

Idaho’s budget still ‘in a tight spot’ in current fiscal year with some costs unknown

Idaho has faced revenues coming in below projections, and already has had to implement some cuts. This week, budget writers have eyed more cuts to make the current fiscal year budget balance.

The $155 million estimated cost for conforming to the bill only includes the revenue reduction from individual tax deductions, Ehlers said. The cost of the corporate tax breaks is not included in his estimate, because he believes business taxpayers have already sought their breaks in response to the passage of the federal bill.

Bill co-sponsor, and budget committee co-Chair Sen. Scott Grow, R-Eagle, said the total cost to the state budget for the corporate deductions may make the cost higher.

“That is the big unknown,” Grow said in an interview Thursday. “That is a challenge. We’ve heard numbers from zero to $80 million … we have no number that we’ve been given that we can rely on, on the corporate side.”

Grow also noted that estimates on the total cost have ranged widely, with many lawmakers citing analyses’ between $115 million and $284 million.

House Revenue and Tax Committee member Rep. John Gannon, D-Boise, repeatedly questioned the accuracy of the conformity bill’s stated fiscal impact.

“I do think the fiscal note needs some significant adjustment,” Gannon said. “I think it is a key to this, especially on the business side.”

The proposed budget submitted by Gov. Brad Little at the beginning of the year did not include the cost of conformity in the current fiscal year, and instead budgeted $155 million for adoption of those tax breaks beginning in fiscal year 2027.

Ehlers and Grow both told the Sun they think it’s important to apply the tax cuts to residents’ 2025 taxes because the personal deductions included in the Big Beautiful Bill only last four years.

“We felt we need to bite the bullet and do that for this year,” Grow said.

The budget writers on the Joint Finance-Appropriation Committee earlier this month adopted a more optimistic revenue projection than the governor used in his budget, the Idaho Capital Sun reported. The committee’s estimated revenue is $152.5 million higher than Little’s.

Grow said Thursday that even with a higher revenue, “we’re in a very tight spot.”