Overview
Idaho remains one of only thirteen states to tax groceries and is one of just three—alongside Alabama and Mississippi—that applies the full state sales tax rate to food purchases. At 6%, this tax costs Idaho families $406 million every year. Although the state returns $251 million through a grocery tax credit system, it still nets $155 million, which is only 1.2% of the state’s $13.9 billion total budget. This relatively small revenue comes at a significant expense to Idaho’s working families, especially those least able to afford it.
A Tax Shift, Not a Tax Solution:
In 1965, Idaho’s politicians initiated a comprehensive overhaul of the state’s tax system. Governor Smylie advocated for a 3% sales tax on all goods—including groceries—calling it “the only practical means” to meet school funding needs. This mirrored current efforts by Governor Little to raise more taxes for schools, though academic improvements have not followed. The legislative package reduced property taxes by $26 million, offering substantial relief to agricultural property owners while shifting the cost to the general population through consumption taxes. Agricultural land also benefited from assessment based on productive use rather than market value, dramatically lowering property tax bills. Farmland worth millions was taxed at a fraction of its value based on crop income, ultimately transferring wealth to necessity and failing to establish sound policy.
Six Decades of Deepening Burden:
Over the years, the grocery tax rate increased several times: to 4% in 1983, 5% in 1986, and 6% in 2006 following Governor Jim Risch’s property tax shift. Each increase was justified as necessary for education, but these changes further entrenched a flawed policy. The grocery tax credit, introduced in 1967 at $10 per person, served as political cover rather than actual relief, remaining so low that it offset only a fraction of what families paid until 2023, when it was raised to $155 per person and $120 for dependents.
Do the Math:
A middle-class family of four spending $12,000 annually on groceries pays $720 in tax but receives $620 in credit—a net $100 burden. Worse still, 60-70% of Idaho families pay more in grocery tax than they receive in credit. The lowest income quintile pays 4.8% of income on the grocery tax, while the highest quintile pays just 1%—making this one of the most regressive taxes in the country.
2017 Veto as Democracy was Blocked:
In 2017, Idaho’s legislature passed a bill to eliminate the grocery tax with strong bipartisan support, but Governor Otter vetoed it, citing concerns over the $100 million revenue loss. Although the legislature could have overridden the veto with simple majorities, they allowed it to stand. The Idaho Supreme Court later upheld the veto’s validity in a 3-2 decision.
Questionable Justifications:
The $155 million net revenue from the grocery tax represents just 2.6% of Idaho’s General Fund. Idaho’s budget grew 54% over five years, yet the state cut income taxes by $253 million in 2024-2025—nearly double what the grocery tax generates. This demonstrates that leadership prioritized other substantial revenue reductions while retaining the regressive grocery tax.
Offset by credit: While the credit helps, it does not achieve equity. Most families pay more than they receive, especially those with lower incomes. The credit does not reduce prices, and very low-income individuals who do not file tax returns miss the credit entirely.
Tourism revenue: House Majority Leader Jason Monks argued that the tax collects revenue from visitors; however, only 19% of visitor revenue comes from groceries, as most visitors eat at restaurants.
Administrative complexity: All six neighboring states successfully manage grocery exemptions, and forty-five states nationwide differentiate between taxable and exempt food items. The SNAP program offers a clear federal definition Idaho could adopt directly but refuses to do so.
Protecting SNAP recipients: SNAP benefits cover the tax, so recipients pay nothing directly. This means the burden falls on working poor families just above poverty thresholds who receive no benefits but pay the full tax.
Regional and National Context shows Idaho’s Isolation on this matter:
Idaho stands alone in the region by imposing the full 6% grocery tax rate. Every bordering state treats groceries more favorably: Washington, Oregon, Montana, and Wyoming have no sales tax, while Utah and Nevada tax groceries at much lower rates (1.75% and 2%, respectively). Nationally, 37 states do not tax groceries at full rates. Tennessee eliminated its grocery tax in 2023, Illinois will end its 1% grocery tax in January 2026, and Virginia recently reduced its rate, possibly eliminating it entirely soon. Idaho defies a long-standing tax policy consensus that food should not be taxed like discretionary goods.
The Political Economy and Why It Persists:
Despite 87% of Idahoans supporting repeal—including majorities across all political parties—the grocery tax endures due to the state’s political structure and funding. Key legislative leaders, notably Senate President Pro Tem Kelly Anthon and House Majority Leader Jason Monks, have blocked reform bills from receiving hearings. Their opposition is linked to substantial campaign contributions from business interests, such as the Idaho Association of Commerce and Industry (IACI) and the Idaho Farm Bureau. The Farm Bureau actively testified against repeal in 2021, arguing that the current system benefits large families, many of whom are farmers who receive credits exceeding their grocery tax and retain property tax advantages from 1965. Major corporate agriculture operations like J.R. Simplot Company and Chobani, prominent IACI members, remain silent on grocery tax policy, indicating satisfaction with a status quo that preserves their advantages while maintaining state services through regressive consumer taxes.
The 2026 Ballot Initiative is Democracy’s Last Resort:
In response to legislative obstruction, Howard Rynearson of the Payette County GOP Central Committee is leading a citizen initiative for 2026. The initiative has gained support from the Idaho Republican Party, Idaho Democratic Party, and Idaho Freedom Foundation—an uncommon alliance, reflecting the grocery tax’s near-universal unpopularity. The proposal would remove the 6% tax on SNAP-eligible food and eliminate the credit system, creating net savings for most families. Implementation is scheduled for Fiscal Year 2028, contingent upon gathering roughly 70,000 signatures plus 6% of registered voters in at least 18 legislative districts.
The Choice Ahead
In 2026, Idaho’s voters will decide whether the state should join the 37 that do not tax groceries at full rates, or remain an outlier alongside Alabama and Mississippi. The facts are clear: the grocery tax generates marginal revenue while placing a severe burden on working families, violating basic principles of tax fairness and contradicting decades of national and international policy consensus. Its survival is due not to sound policy rationale, but to political capture, with a small group of powerful lawmakers protecting a revenue source that faces overwhelming constituent opposition.
Idaho’s decision on this referendum will determine whether the state aligns with mainstream tax policy or continues taxing essential food at rates that are out of step with its neighbors and most developed nations.
If you care about our state please go to https://repealidahogrocerytax.org/ and find out how you can help eliminate this onerous tax that our legislators refuse to dispose of:
“We get the Government We Deserve”.
