A History of Idaho’s Grocery Tax

Origins of Idaho’s Grocery Tax:

Idaho had briefly experimented with a 2% sales tax (including on food) in 1935 to raise revenue, but that early tax proved hugely unpopular and was repealed in 1937. Idaho’s taxation of groceries is rooted in the state’s adoption of a general sales tax in the mid-1960s. While many assume the grocery tax was a later add-on, it actually began as part of Idaho’s very first sales tax law in 1965 which at the time was 3%. It was Governor Smylie who explicitly “asked [for a] sales tax to finance education”, suggesting the new revenue would bolster Idaho’s school system. There was strong opposition to this tax forcing a voter referendum in 1966 which was upheld by a yes vote of 61%. Supporters assured voters that the rate was low and the impact would be softened by a unique income tax credit introduced alongside the tax.

Lawmakers realize this was a regressive tax:

Idaho lawmakers recognized taxing groceries was regressive, since food is a necessity. To help sell this tax they created a small income tax credit to offset some of the sales tax costs for Idaho residents initially set at $10 per person in 1965. This was not called a grocery credit and was not linked to food purchases. The credit was expanded to $15 in 1973 and was eventually made refundable, meaning even low-income seniors and later all residents could receive it even if they owed little income tax and the credit for seniors rose to $30 by 1978. Nowhere in Idaho law was this credit formally tied to grocery purchases until much later it was simply a general tax credit that lawmakers increased when pressure mounted to relieve the grocery tax burden. The grocery tax credit gradually increased so by mid-2010s, a family of four could get $400 back annually, approximating the tax paid on ~$6,667 in groceries.

It was 2017 when the Legislature passed repeal of the grocery tax:

This was a dramatic step by the legislature repealing this tax with overwhelming bipartisan support. Unfortunately, Governor Butch Otter was finishing up his 3^rd term and decided to veto this bill, citing budget concerns. The veto was so controversial that a group of 30 lawmakers even sued, arguing the veto missed a legal deadline, but the Idaho Supreme Court ultimately sided with Otter’s veto.

In 2018, Brad Little voiced support for repeal of the tax:

During his 2018 campaign, Brad Little voiced support for repealing the grocery tax and even promised it would be gone by 2020, however, repeal did not occur. Instead, Governor Little and legislators opted to increase the grocery tax credit again. In 2022, a bill passed (House Bill 509) raising the credit from $100 to $120 (and $140 for seniors). Little signed this into law, boosting relief at tax time but leaving the 6% tax in effect at the checkout line. As food costs continued to rise through 2023/24 as inflation ran rampant and the Legislature again acted on the credit. In March 2025, Governor Little signed a law increasing the credit to $155 per person (phased in by 2026). Idahoans figured out pretty quickly that these credit increases were nothing but rebates and not an end to this egregious regressive tax which hurt the lower income earners the most.

What funding increases for education?

For whatever reason, Little and the legislators keep talking about the necessity of keeping the grocery tax to make sure we have enough money to fund education. I have never heard so much BS in my life because if your refunding most of the money in the form of rebates how can this money be necessary to fund education. It is unfortunate that our leader of the house Mike Moyle and Senate Pro Tempore Kelly Anthon refused to listen to the majority of legislators who have presented bills to repeal the grocery tax. These two legislators in a position of power will not allow this bill to eliminate the tax to come to the floor for a vote. We must ask the question Why? In 2015, than house member Moyle stood in front of a senate committee and argued against the grocery tax. How do I know that because I was there with him in front of that committee. I firmly believe that there are some lobbyists who do not want this bill repealed and for the life of me I can’t find out who or why. If the government collects the money all year and then supposedly gives it bac at tax time in the form of rebates why do we even have this tax in the first place.

They claim the tax is to collect money from tourists in Idaho.

This is just a lot of bunk as I have yet to hear a responsible argument on why we need to keep this tax. We are constantly told that it is to collect money from the Tourist Trade in our state, however, out of staters only account for $19 million of the $240 million generated by the grocery tax. This is an insignificant amount of money in a state budget of over $14 billion so their argument does not hold water. They complain that losing $200 million is no small matter but if the money is being returned to the people who paid this tax it is only available to use till the next tax year when they send out rebates. Defenders of this tax warn that repealing the grocery tax blows a hole in the budget that could lead either to cuts in services or increases in other taxes. Why is it that once government gets a tax they never want to repeal it. We currently have a rainy-day fund in Idaho of 1.2 Billion dollars. How much money do they need in reserve if Idaho’s economy is booming as they talk about every time they are interviewed by the press.

Is this Grocery Tax really funding education?

It was only last week that I did some research on Idaho’s standing in the education department and it was not good as we had an overall ranking of 47^th out of the 50 states by World Population Review and WalletHub ranked Idaho at number 36. I would seem that it is not more money that we need for our education system to improve but some real competition from school choice. While Idaho passed a school choice bill this past legislative session it is only going to accommodate about10,000 students in a specific income bracket. Can you imagine if that $200 million in grocery tax was actually spent on school choice we could offer a choice to 40,000 more students. It is not the amount of money we spend on education that gives us better quality it is competition for a better education that will improve our education standards. So, all of this talk you hear from our legislators who are hell bent on keeping this grocery tax is just that TALK. They talk the talk but they don’t walk the walk.

Repeal the Grocery Tax:

It is time we ended this egregious tax and there is now a movement underway by a group for a grassroots effort to end this tax through a ballot initiative. There are only 4 states charging sales tax on groceries currently.A very recent poll conducted by the Rassmussen Group for the Mountain States Policy Center revealed that 87% of Idahoans are in favor of repealing the tax on food, commonly known as “The Grocery Tax”. It is time for action. It is also time to think about replacing the two biggest obstacles in our legislature who have held up the repeal of this onerous tax they are House Speaker Mike Moyle and Senate Pro Tempore Kelly Anthon. Please take a minute to visit this website https://repealidahogrocerytax.org/ and do your part by singing the petition or volunteering to help get signatures so we can get rid of this terrible tax once and for all.

“We Get the Government We Deserve”.