So we received a Idaho refund from our 2019 taxes in 2021. We paid Idaho in 2019 and 2020 and will owe in 2021. Why do my taxes go up because they refunded me money?

[tmstrayer1-]

Idaho had a surplus so decided to give some credits to people.  We received $2,778 and now we have to pay taxes again this year.  It seems like I am paying for them giving me a refund in 2019?

[MaryK4]

On February 4, 2022, Governor Little signed House Bill 436 that provides another tax rebate to full-year residents of Idaho.  Any Idahoan who was a full-year resident in 2020 and 2021 and who also filed an Idaho individual income tax return or a Form 24 for those years is eligible for the rebate. Nonresidents and part-year residents aren't eligible.

They will apply your rebate to your 2021 tax after all payments received in April are processed. Any remaining amount will be refunded to you. If you owe more than the amount of your rebate, you'll receive a statement in May showing the amount due.

[fanfare]

If you get a rebate for a year prior to last year, you may have to calculate on your own whether that is also taxable as a state refund.

The tax software can only look at state-tax-paid info from the previous year return imported at startup.

See IRS Pub 525 for more information.