Idaho’s circuit breaker changes will disproportionately affect low-income seniors

More than 75% of claimants make less than $20,000 per year

Information provided by the Idaho State Tax Commission.

The average median income of an individual using Idaho’s circuit breaker program for property tax exemption was $17,635 in 2019, according to data from the Idaho State Tax Commission.

Did you know?

According to the National Conference of State Legislatures, the circuit breaker program “receives its name from its electrical namesake, which shuts off the flow of electricity when a system is overloaded. When property taxes exceed a specified percentage of income, the circuit breaker overrides the property tax system.”

Of the 26,916 Idahoans who filed claims through the program in 2020, 85% were over the age of 65.

And under new property tax law passed by the Idaho Legislature and signed by the governor this year, about 4,000 of all claimants will likely no longer qualify for the program in 2022.

The program, according to the tax commission, provides reduced property taxes to elderly, disabled, and widowed taxpayers, and the state makes up the difference for local government property tax revenue that would otherwise be lost.

Claimants are approved based partly on yearly income, which has been based around federal poverty guidelines. In 2021, the maximum allowable income is $31,900. According to data from the tax commission, only about 5% of applicants were at the top end of that income bracket in 2020.

Information provided by the Idaho State Tax Commission.

House Bill 389, introduced by Rep. Mike Moyle, R-Star, passed both chambers of the Legislature within two days in early May, passing 48-20 in the House and squeaking through with a 19-16 vote in the Senate. All Democrats in the Legislature voted against it, and some Republicans joined them.

Among other provisions, the tax bill raised the maximum exemption for the circuit breaker program from $1,320 to $1,500, but also added an asset test for a claimant’s home. Those whose home value is 125% of the median price would no longer qualify for the exemption. 

During the bill introduction, Moyle told legislators the cap is aimed at seniors living in “million-dollar homes.” He said those who no longer qualify would be referred to the state’s property tax deferral program

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Nearly 76% of participants make less than $20,000 per year

Data from the Idaho State Tax Commission for 2020 showed the most claims for the program came from the following counties:

  • Canyon County: 4,358
  • Ada County: 4,178
  • Kootenai County: 2,960
  • Twin Falls County: 1,531

In April, the median sales price in Canyon County was $399,856. Using that median, if a resident met the income requirements for the program but had a home worth more than $499,820, they would no longer qualify for the exemption.

Alan Dornfest, property tax policy chief at the Idaho State Tax Commission, said he had never heard concerns about claimants’ home values until the bill’s introduction.

“The program has never had an asset test in its almost 50-year history,” Dornfest said. The commission will need the next year to collect information on home values by county.

The circuit breaker program began in 1974 and evolved out of an existing exemption for widows. If a claim is approved, a partial or complete exemption is granted for the property taxes on a home and up to 1 acre of land. During the first year, 15,924 claims were approved and paid out for a total of $1.87 million. In 2020, the program cost the state $20.6 million, the highest in its history.

‘Without that circuit breaker help, where are these individuals going to go?’

Françoise Cleveland, assistant state director of advocacy for AARP Idaho, testified against the bill on behalf of the organization and its 185,000 members who are over the age of 50. Cleveland said many seniors are on a fixed income, and property tax is the most burdensome tax for low-income and older residents. The vast majority of adults over the age of 65 want to stay in their homes as long as possible, she said, and challenges like housing costs and financial uncertainty can put that possibility out of reach.

“We’ve been hearing from seniors for years who have been struggling to pay their taxes,” Cleveland said. “Without that circuit breaker help, where are those individuals going to go?”

Information provided by the Idaho State Tax Commission.

While the bill increased the maximum exemption, Cleveland said the home value provision undermines the goal of the circuit breaker program. Moreover, she said, it also doesn’t provide options for an appeals process for an applicant to prove they need the assistance to be able to stay in their home.

Though Moyle told members of the House and Senate that the bill was drafted with input from several organizations and representatives of counties across Idaho, Cleveland said AARP Idaho was not among those consulted. Early in the session when other property tax bills were under consideration, Cleveland said staff members at AARP Idaho sent emails asking to be involved to little effect.

“We get limited response,” she said.

When House Bill 389 was introduced, Cleveland said the only way AARP Idaho knew about it was through other legislators letting the organization know it was happening. She had to write and deliver testimony at the hearing within two hours.

Since the changes don’t go into effect until 2022, Cleveland hopes the Legislature will consider amendments in the next session starting in January.

“I hope that as the Legislature looks at this that they put this into effect, to have an appeals process or raise the eligibility cap to maybe 200% of the median assessed home value,” Cleveland said. “But there needs to be a little bit more of a safety net for this program so that people can age in place.”

Are you affected by this change?

Idaho Capital Sun reporter Kelcie Moseley-Morris wants to hear your story. Email [email protected] if you are among the residents who will be affected by the changes to the circuit breaker program.