Idaho Advocates Push Ten-Year Plan to Eliminate Property Taxes Without Raising Other Levies

A Deep-Rooted Tax Under Scrutiny

Property taxes in Idaho trace their origins to before statehood itself, when the Idaho Territory established them as a primary revenue mechanism beginning in 1863. Now, some fiscal policy advocates are arguing that the tax’s longevity is not a justification for its continuation — and they say a decade-long phase-out plan is not only feasible, but fiscally responsible.

The argument centers on a proposal to use Idaho’s natural economic growth — and the resulting increases in sales and income tax collections — to progressively replace property tax revenue distributed to local governments, eventually eliminating the tax entirely over a ten-year window.

From Territorial Origins to $2.2 Billion

Idaho’s property tax began as a modest instrument of government finance. When the state first imposed statutory caps in 1895, total statewide collections were limited to $231,000. By fiscal year 2025, property taxes paid by Idaho homeowners had grown to nearly $2.2 billion annually.

The tax’s structure has shifted significantly over the decades. Idaho adopted an income tax in 1931 and a sales tax in 1965 — the latter of which prompted the state to abolish its own property tax at the state level. However, cities, counties, school districts, and a wide array of special taxing districts — covering services from library operations to mosquito abatement — continued collecting property taxes at the local level, where they remain the dominant revenue source today.

State law currently limits local taxing authorities from increasing their budgets by more than 3 percent annually, plus an allowance for new construction, capping overall growth at roughly 8 percent per year. Advocates for elimination note that many local governments regularly reach that ceiling.

The Case for Abolition

Proponents of eliminating the property tax make both a philosophical and a practical argument. On principle, they contend that taxing property under threat of government seizure means homeowners effectively “rent” rather than own their land — a position at odds with constitutional protections of private property.

On practical grounds, they point to the substantial administrative machinery required to assess, bill, and collect property taxes across Idaho’s 44 counties. Each county maintains an elected assessor and a full assessor’s office, employs appraisers, billing staff, and legal personnel, and processes disputes through the courts. Advocates argue that abolishing property taxes would eliminate the need for that entire infrastructure, potentially saving hundreds of millions of dollars over time in administrative costs alone — savings they say could be redirected to local government operations.

For those following related local finance questions, Rexburg voters are currently weighing a revised police department bond measure that illustrates how dependent municipal services remain on voter-approved property-tax instruments.

The Replacement Mechanism

The elimination proposal does not call for raising income or sales taxes to compensate for lost property tax revenue. Instead, it relies on Idaho’s existing legal authority to transfer state funds to local governments in lieu of locally collected property taxes.

Under the framework, the organic expansion of Idaho’s economy would generate sufficient growth in sales and income tax receipts to fund state-to-local transfers that progressively replace property tax collections. The plan envisions a gradual phase-down over ten years, allowing local governments time to adjust their budgeting processes.

Supporters acknowledge that local governments depend heavily on property tax revenue and that any transition would require careful legislative design. Idaho law already permits state transfers of this kind, and proponents say fully utilizing that mechanism is the key to making elimination work without disrupting public services.

What Comes Next

The proposal has not yet been introduced as formal legislation, but advocates say a detailed legislative roadmap has been developed outlining the phased replacement structure. Whether Idaho lawmakers take up such a measure will depend in part on appetite within the Legislature and among county governments that currently rely on property tax receipts as their most predictable revenue stream.

Housing affordability and property costs have emerged as persistent concerns for Idahoans in recent years. Federal lawmakers have also engaged the issue from different angles — U.S. Sen. Mike Crapo has outlined proposals addressing affordable housing as part of broader legislative priorities for the state’s congressional delegation.

With property tax bills continuing to climb alongside rising home valuations, the debate over whether Idaho should join the small number of states that have moved to significantly curtail or eliminate property taxes is unlikely to fade from the state’s policy conversation.