On February 10, 2026, Idaho Governor Brad Little signed House Bill 559 (HB 559), which updates Idaho's conformity to the Internal Revenue Code (IRC) and decouples from certain provisions of the "One Big Beautiful Bill Act" (OBBBA) with retroactive effect to January 1, 2025.

HB 559 changes Idaho's IRC conformity date to January 1, 2026 (from January 1, 2025). HB 559 conforms Idaho to the tax changes contained in the OBBBA, except for: (1) bonus depreciation provisions under IRC Section 168(k) (which Idaho has historically decoupled from) and IRC Section 168(n); and (2) the deduction for research and experimentation (R&E) expenditures incurred in tax years beginning on or after January 1, 2022, and before January 1, 2025. Those expenditures already being amortized will continue until the end of their five-year amortization schedule. Idaho will conform to the deduction for R&E expenses incurred in 2025 and later. With the enactment of HB 559, businesses cannot use the same R&E expenses for both a deduction and Idaho tax credit for research activities.

Implications

Idaho becomes another state to address its IRC conformity in light of the OBBBA, selectively decoupling from the provisions noted above.