Who Pays in Idaho

Idaho Taxes Bread at 6%. It Caps Billion-Dollar Factories at $400 Million

Idaho taxes a low-income family’s groceries at the full sales tax rate. It exempts a billion-dollar factory’s value above $400 million. Both are policy choices, as one side’s cost falls on the other.

The Short Version

Idaho is one of a shrinking group of states that still charges sales tax on groceries, and at 6% its rate is the highest of them. The state’s answer is a $155-per-person credit. That credit is paid once a year, only to people who file for it, and it goes in the same amount to a millionaire as to a minimum-wage family. It doesn’t fully cover the tax on even the federal government’s cheapest healthy diet. At the same time, a 2008 law caps the taxable value of any project with a $1 billion investment in one county at $400 million permanently. Micron’s Boise plant and Meta’s Kuna data center both use it. Whatever those companies don’t pay doesn’t disappear. It moves onto the homeowners and small businesses in the same taxing districts.

Repealing the grocery tax would cost a net $200–230 million a year. In 2025 the Legislature found $253 million a year for an income tax cut that sent most of its benefit to the highest earners. The issue isn’t whether Idaho can afford repeal. It’s what the state chooses to pay for.

The Devil is in the Details Version

A tax on the one purchase no one can skip: Every week, a family in Idaho pays the state’s full 6% sales tax on bread, milk, and eggs. Only a handful of states still tax groceries statewide, and Idaho’s rate is the highest among them. The others have cut theirs: Mississippi to 5%, South Dakota to 4.2%, Tennessee to 4%, Alabama to 2%, and Missouri to 1.225% (1). A 2024 poll found 87% of Idahoans support ending the tax (2).

Food is the purchase a family can’t cut back on when money is tight. That is why a sales tax on groceries takes a larger share of income from a poor household than a rich one. The rich household spends more on food in dollars, but far less as a share of what it earns.

The Institute on Taxation and Economic Policy has modeled Idaho’s whole state and local tax system by income. The poorest fifth of Idahoans pay 9.5% of their income in state and local taxes. The top 1% pay 6.4%. For the lowest-income households, sales and excise taxes alone take 5.7% of income (3). The grocery tax is a large part of why the people with the least pay the highest share.

What the credit does, and what it doesn’t: Idaho’s defenders of the grocery tax point to the food tax credit. For most residents it is now $155 per person per year, or up to $250 with receipts (4). It was raised from $120 in 2025. The bill’s own coverage noted that a family of four’s $620 credit offsets the tax on about $10,033 of groceries a year (5).

That is below what the U.S. Department of Agriculture says it costs to feed a family of four on its cheapest nutritious plan, the Thrifty Food Plan, which sets SNAP benefit levels. That plan cost $992.90 a month in January 2025 (6), about $11,915 a year. At 6%, the tax on that bare-bones diet is about $715, so the credit leaves roughly $95 uncovered. Families who spend more than the minimum pay more. (These figures are our arithmetic from the USDA and Tax Commission numbers.)

The gap in dollars is smaller than the problems with how the credit works:

The tax is weekly, but the refund is yearly. A family pays about $60 a month in grocery tax all year. It gets the credit back only after it files, the following spring. For a household living paycheck to paycheck, that is a year-long interest-free loan to the state.

You have to claim it. People who earn too little to owe income tax can still get the credit, but only by filing a return or a separate Form 24. SNAP households can’t claim the credit for any month they receive benefits (7). The tax-policy researchers at ITEP call this paperwork “the main drawback of credits” compared with simply exempting food, because eligible people who don’t know about the credit miss it (8).

It isn’t targeted. The Tax Commission lists only one eligibility requirement: being an Idaho resident (4). A household earning $500,000 gets the same $155 per person as one earning $25,000. The money spent sending checks to high-income households is money not spent on the families the tax hurts most.

Why the credit keeps the tax alive: The credit works less like a fix and more like a release valve. Each time pressure to repeal the grocery tax builds, the Legislature raises the credit a little: $120, then $155. That takes the edge off the anger without removing the tax. The tax stays in the base, where its revenue grows every year with food prices. The credit is a fixed dollar amount that shrinks in real value until the next political fight. A permanent tax paired with a credit that has to be fought for, over and over, is a design that favors the tax.

The money was found, just not for this: The state’s Division of Financial Management estimates that repealing the grocery tax, while also ending the credit, would cost a net $200–230 million a year (2). That is a real sum. But the Legislature has recently found larger sums for other priorities.

In March 2025, Governor Little signed House Bill 40, cutting the flat income tax rate from 5.695% to 5.3%. His office called it “the single largest income tax cut in state history,” worth $253 million a year (9). The Idaho Center for Fiscal Policy calculates that Idaho gave up $4 billion in income tax revenue from tax year 2021 through 2025. It estimates the top 1% of earners received an average income tax cut of $20,407, while median-income families received $453 (10). A June 2026 study by the same group, covering state and federal cuts since 2018, found that the lowest-income Idahoans, earning under $29,200, “saw their taxes increase by an average of $96 per year” (11).

$253 million tax cut: Yearly cost of the 2025 income tax cut (HB 40), the largest in Idaho history (9)

$200–230 million
Net yearly cost of repealing the grocery tax and ending the credit, per the state Division of Financial Management (2)

A Republican-led citizen initiative to repeal the grocery tax was cleared to gather signatures in 2025 (2). The Secretary of State now lists it as withdrawn or replaced, and it is not on the November 2026 ballot (12).

The $400 million ceiling: While grocery shoppers pay on every dollar, Idaho’s largest industrial projects don’t. Idaho Code § 63-4502 says that when a company makes “an investment of at least one billion dollars” in new plant and buildings in a single county within 84 months, all taxable value above $400 million is exempt from property tax (13). Corporate income is taxed at the same flat 5.3% as individual income (14). So the real difference in how corporations and households are treated is not the income tax rate. It is carve-outs like this one.

The law was written in 2008 to attract a French nuclear company, Areva, to eastern Idaho; Areva never built. Micron, already in Boise, qualified and has claimed the cap since 2011. By 2019 Micron’s Boise facility was valued at $1.86 billion, and the company paid $4.75 million in property taxes, “only 23% of what it would owe” at full value (15). In 2024 Micron paid $3.4 million. BoiseDev estimated that without the cap, the original plant would have owed about $20.32 million in 2020. Ada County’s assessor has explained that the exemption “doesn’t reduce the total amount of taxes collected.” It moves that tax onto other property in the same taxing districts (16).

The benefit is growing: Micron’s new $15 billion Boise fab is owned by a separate entity, which the county assessor confirmed to BoiseDev. BoiseDev reports that entity can qualify for its own $400 million cap, which would effectively double Micron’s exemption (16). The new fab also benefits from a 2024 law, HB 678, that exempts construction materials for semiconductor plants from sales tax. Its fiscal note estimated the cost at about $18.4 million a year during construction (17). On the federal side, the Boise project has a CHIPS Act award from the U.S. Commerce Department and a promise of 3,500 manufacturing and facility jobs (18).

The data centers get two breaks: Since July 2020, Idaho has exempted data centers from sales tax on both their server equipment and the construction materials for the buildings. To qualify, a project needs $250 million in investment and at least 30 new jobs paying at or above the county average wage (19). Meta announced its Kuna data center after that law passed (20).

The same data centers can also use the $400 million property tax cap: In May 2025, Ada County commissioners approved a capital-investment exemption for the Kuna data center under the 2008 law (21). An August 2026 analysis reported that by 2025 the Meta facility’s value had crossed $1 billion, “capping its taxable value at $400 million.” It estimated the average Kuna property owner pays roughly $160 to $180 more a year as a result (22). That household estimate comes from a single analysis and should be treated as approximate.

Lawmakers from both parties tried to rein this in during 2026: HB 820 would have limited the sales tax break to 20 years and made a company choose either the sales tax break or the property tax cap, “not both” (23). It never advanced out of committee (24). A bipartisan follow-up, HB 897, would have limited the sales tax exemption to servers, phased data centers out of the property tax cap, and required state reporting on the costs. It did not pass (25). Even if it had, it was written to leave Meta’s Kuna project under the original rules (20).

Why a tax break is easier than a budget line: If the Legislature wanted to hand Micron or Meta millions of dollars a year, it would have to put that in a budget, vote on it, and defend it every year. A property tax cap delivers the same value without any of that. It is never appropriated, it never comes up for a vote again, and its cost never appears as a number anyone approves. It shows up only as a slightly higher tax bill on every other parcel in the district. Spending through the tax code is quieter than spending through the budget. That’s why it lasts, and why 2026’s reporting requirement mattered even though it failed.

Where the property tax load landed: These breaks sit inside a system that was already shifting weight onto homes. From 2019 to 2022, all residential property’s share of Idaho property taxes rose from 67.9% to 75.4% (26). Relief measures since then have pulled it back somewhat. In 2025, residential property paid 71.2% of all property taxes after relief, and owner-occupied homes alone paid 44.3% (27). Homes still carry more than seven of every ten property tax dollars in the state.

The strongest case for the current system: The other side has serious arguments. The honest version of this op-ed has to meet them. The Tax Foundation argues that exempting food is a poorly targeted way to help the poor. SNAP purchases are already tax-free, and higher-income households buy more groceries, so they capture much of an exemption’s value. Its conclusion is that “grocery tax credits provide actual progressivity at a lower cost than the broad exemption of groceries” (28). ITEP, a group that generally favors more progressive taxes, agrees that credits can be better targeted (8). That is the real point. But it argues for a targeted credit: phased out by income, possibly paid in advance, and indexed to food prices. Idaho’s credit is none of those. It is a flat, once-a-year check to every resident. If the credit is the justification for keeping the tax, it has to do the job the credit’s defenders say credits do.

On Micron and data centers: states compete hard for fabs and data centers. Micron’s Boise expansion brings federal CHIPS money and thousands of jobs (18). The fiscal note for the 2024 semiconductor break projected “$620 million a year in additional wages” (17). Without incentives, some of these projects might have gone to another state. Micron is a Boise company, and the jobs are real.

That case is a reason to weigh these incentives openly, not to let them run on autopilot. The 2008 cap is permanent. It was built for a company that never came and claimed by one that was already here (15). It stacks with sales tax breaks. Its cost is never appropriated or reported. Each 2026 attempt to add a time limit, an either-or rule, or basic reporting failed (25). A good incentive can survive a sunset date and a public cost report.

What the record shows: Idaho taxes groceries at the highest rate of any state that still taxes them. It offsets that with a flat credit that arrives late, has to be claimed, and doesn’t fully cover even a minimum diet. Meanwhile it lets billion-dollar projects stop paying property tax above $400 million forever, with the difference moved onto their neighbors. Neither choice was forced by the budget. Both are about who carries the load.

What readers can do

1. Ask your county assessor which properties in your taxing district hold a § 63-4502 exemption, and how much value is exempt. The assessor verifies these projects (21), so the numbers exist.
2. Ask your legislators to support a tax-expenditure report that lists every major exemption’s yearly cost, as HB 897 proposed (25). Then ask where they stand on a sunset for the $400 million cap.
3. Push for a specific grocery fix, either full repeal or a credit that is income-targeted and paid in advance. Point to the $253 million HB 40 cost when you’re told repeal is unaffordable (9).
4. Claim the credit you’re owed. Non-filers can use Form 24 (7). Help a neighbor, especially a senior or someone who doesn’t normally file, claim theirs.
5. Watch for a renewed repeal initiative. The 2026 effort didn’t reach the ballot (12). Supporters’ signatures are the tool that bypasses committees that won’t act.

What this piece covers, and what it doesn’t

This piece compares how Idaho taxes the lowest-income households with the property tax breaks given to its largest projects. It does not cover the history of the grocery tax since 1965, which is a book-length story. It also leaves out the cost-shifting that data center electricity demand may create in utility rates, the water use of data centers, and a full accounting of Micron’s state incentives. The yearly revenue cost of the data center sales tax exemption was not found in any public source this research reached. The Kuna household estimate comes from a single analysis. The new Micron fab’s second cap is reported by one outlet quoting the county assessor.

References

1. Kiplinger. “States That Still Tax Groceries in 2026.” Accessed September 27, 2026. kiplinger.com. Cited 1×
2. Guido, Laura. “Ballot initiative proposed to eliminate Idaho’s 6% sales tax on food.” Idaho Capital Sun, August 11, 2025. idahocapitalsun.com. Cited 4×
3. Institute on Taxation and Economic Policy. “Idaho: Who Pays? 7th Edition.” January 2024. itep.org. Cited 1×
4. Idaho State Tax Commission. “Idaho Food Tax Credit.” Accessed September 27, 2026. tax.idaho.gov. Cited 2×
5. Idaho Capital Sun. “Idaho’s grocery tax credit would increase to $155 under new bill.” January 27, 2025. idahocapitalsun.com. Cited 1×
6. U.S. Department of Agriculture. “Official USDA Thrifty Food Plan: U.S. Average, January 2025.” fns.usda.gov. Cited 1×
7. Idaho Center for Fiscal Policy. “Grocery Tax Credit FAQs.” Accessed September 27, 2026. idahofiscal.org. Cited 2×
8. Institute on Taxation and Economic Policy. “Options for a Less Regressive Sales Tax.” itep.org. Cited 2×
9. Office of the Governor. “Idaho delivers largest income tax cut in state history, sending another $253 million back to Idahoans.” March 6, 2025. gov.idaho.gov. Cited 3×
10. Idaho Center for Fiscal Policy. “2025 Update: Idaho’s String of Income Tax Cuts Continues to Jeopardize Investments in Public Services.” November 2025. idahofiscal.org. Cited 1×
11. Idaho Capital Sun. “New report finds tax cuts benefit highest-income Idaho households most.” June 18, 2026. idahocapitalsun.com. Cited 1×
12. Idaho Secretary of State. “Initiatives & Amendments.” Accessed September 27, 2026. voteidaho.gov. Cited 2×
13. Idaho Code § 63-4502 (as amended 2018). legislature.idaho.gov. Cited 1×
14. Tax Foundation. “State Corporate Income Tax Rates and Brackets, 2026.” taxfoundation.org. Cited 1×
15. Carmel, Margaret. “Idaho tried to lure a nuclear company in 2008. Instead, Micron got millions in property tax breaks.” BoiseDev, November 2020. boisedev.com. Cited 2×
16. Carmel, Margaret. “Micron’s property tax exemption to double.” BoiseDev, May 2025. boisedev.com. Cited 2×
17. Idaho Press. “Tax break for semiconductor expansions passes Legislature.” 2024. idahopress.com. Cited 2×
18. National Institute of Standards and Technology, CHIPS for America. “Micron (Idaho).” Accessed September 27, 2026. nist.gov. Cited 2×
19. Idaho Department of Commerce. “Data Center Sales Tax Exemption.” Accessed September 27, 2026. commerce.idaho.gov. Cited 1×
20. Carmel, Margaret. “Bipartisan bill would limit tax exemptions for data centers.” BoiseDev, February 2026. boisedev.com. Cited 2×
21. Citizen Portal. “Commissioners approve tax exemption for new capital investment for Kuna data center under Idaho code.” May 6, 2025. citizenportal.ai. Cited 2×
22. Almon, Brian. “Data Centers in Idaho: Cost or Benefit?” Gem State Chronicle, August 3, 2026. gemstatechronicle.com. Cited 1×
23. Idaho Freedom Foundation. “House Bill 820—Tax exemptions, data centers.” 2026. idahofreedom.org. Cited 1×
24. LegiScan. “Idaho H0820, 2026 Regular Session.” legiscan.com. Cited 1×
25. Idaho Conservation League. “HB 897: Tax Accountability for Data Centers (2026).” idahoconservation.org. Cited 3×
26. Idaho State Tax Commission. “2022 Market Values and Property Taxes.” January 26, 2023. tax.idaho.gov. Cited 1×
27. Idaho State Tax Commission. “Market Values and Property Taxes for 2025.” December 22, 2025. tax.idaho.gov. Cited 1×
28. Walczak, Jared. “The Surprising Regressivity of Grocery Tax Exemptions.” Tax Foundation, April 13, 2022 (updated September 13, 2023). taxfoundation.org. Cited 1×