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H 263

TAXATION – Adds to existing law to provide that certain fees related to animal adoption and rescue are not subject to sales and use taxes.

68th Legislature, 1st Regular Session (2025)

Idaho H 263 clarifies that animal adoption/rescue fees charged by governments or qualifying nonprofits are service fees, not sales of goods, and thus not taxed.

U.C. to be returned to Ways & Means Committee
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Bill Summary · H 263

Summary — H 263 (Idaho, 2025)

What the bill does (plain language)

H 263 amends Idaho tax law to specify that fees charged for animal adoption or rescue by certain public and nonprofit organizations are treated as service fees — not sales of tangible personal property — and therefore are not subject to Idaho sales and use taxes.

Purpose / intent

The bill responds to recent guidance from the Idaho State Tax Commission classifying rescued animals as tangible personal property subject to sales tax. The legislation clarifies that adoption/rescue fees charged by qualifying entities are compensatory service fees covering care costs (feeding, housing, transportation, veterinary care) and should not be taxed as a sale of goods.

Key provisions

  • Adds a new Section 63-3622XX to Idaho Code, Chapter 36, Title 63.
  • Declares that any fee charged by:
    • a local government, or
    • a nonprofit entity with 501(c)(3) federal tax-exempt status, for the adoption or rescue of an animal is a service fee, not the sale/use of tangible personal property.
  • Explicitly lists that adoption/rescue fees may include costs ordinarily and necessarily incurred for care, feeding, housing, and transportation of the animal.
  • States such fees "shall not be subject to the taxes imposed by this chapter and have never been subject to such taxes."
  • Contains an emergency clause; the act is effective July 1, 2025.

Who is affected

  • Exempted: local governments and 501(c)(3) nonprofit animal rescues/shelters that charge adoption or rescue fees.
  • Not affected / not exempted by this bill: for-profit sellers, private individuals, or entities that are not local governments or qualifying nonprofits (unless other law applies).

Fiscal impact

  • Idaho State Tax Commission estimates revenue loss will not exceed $100,000. The estimate notes much of this revenue likely was not previously collected because many rescuers already treated the fees as services.
  • Fiscal note and statement of purpose were prepared by proponents and include a disclaimer that they are not determinative of legislative intent.

Legislative status & timeline

  • Introduced: February 18, 2025.
  • Passed House (Feb 28, 2025) and passed Senate as amended (Mar 25, 2025) with overwhelming support.
  • Senate amendment added "local government" to the list of covered entities.
  • Emergency effective date: July 1, 2025.
  • Most recent procedural entry: U.C. to be returned to Ways & Means Committee (April 2, 2025).

Sponsors

  • Primary House sponsor: Ways & Means Committee (floor sponsor Rep. Charlie Shepherd).
  • Senate floor sponsor: Sen. Codi Galloway.
  • Legislative co-sponsors: Sen. Anthon, Sen. Carlson, Rep. Cheatum.

Notes: The bill creates a statutory clarification of tax treatment; any legal interpretation or application will depend on administrative implementation by the Tax Commission and future judicial or administrative guidance.

Compiled from official sources — confirm details with the bill’s official record.

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