TAXATION – Amends House Bill 40, House Bill 304, and existing law to revise provisions regarding certain tax deductions, certain corporate income tax rates, certain protections for taxpayers, and certain sales tax distributions and to revise an effective date.

This bill revises Idaho's tax code to allow military retirees and surviving spouses to deduct their military retirement pay from state taxable income, regardless of age or disability status. It sets the deduction limit at the maximum Social Security benefit amount for the tax year, adjusted for inflation, and clarifies how federal retirement benefits affect this deduction. The change directly affects Idaho military retirees, their families, and veterans receiving military retirement pay, ensuring they can reduce their state tax burden similarly to other retirement benefits. The policy update, effective retroactively from January 1, 2025, replaces previous age and disability restrictions.