WAFD, Inc. v. Idaho State Tax Commission

── WAFD, Inc. v. Idaho State Tax Commission ── Court: Idaho Supreme Court Date: April 23, 2026 Category: General IN THE SUPREME COURT OF THE STATE OF IDAHO Docket No. 52584 WAFD, INC., (formerly known as ) WASHINGTON FEDERAL, INC.), ) ) Boise, February 2026 Term Plaintiff-Respondent, ) ) Opinion filed: April 23, 2026 v. ) ) Melanie Gagnepain, Clerk IDAHO STATE TAX COMMISSION, ) ) Defendant-Appellant. ) ) Appeal from the District Court of the Fourth Judicial District of the State of Idaho, Ada County. Lynn G. Norton, District Judge. The judgment of the district court is affirmed. Raúl R. Labrador, Idaho Attorney General, Boise, for Appellant. Eric Mahler argued. Hawley Troxell Ennis & Hawley LLP, for Respondent. Richard G. Smith argued. _____________________________________________ MOELLER, Justice. In 2021, the Idaho Legislature passed an amendment to Idaho Code section 63-3025, lowering the corporate tax rate. The amended statute stated that the new reduced rate was applicable to all “taxable years commencing on and after January 1, 2001.” The bill also contained an emergency clause, which set the effective date of the new rate as January 1, 2021. Based on the new law, WAFD, Inc., formerly known as Washington Federal, Inc. (“WAFD”), was faced with uncertainty when filing its 2021 income tax return. WAFD’s fiscal year—October 1, 2020, to September 30, 2021—straddled the effective date for the reduced rate: January 1, 2021. WAFD ultimately filed its 2021 tax return, claiming a refund using a blended tax rate that prorated the two different rates over the corresponding months of its fiscal year. The Revenue Operations Division (“Division”) of the Idaho State Tax Commission (“Tax 1 Commission” or “Commission”) rejected WAFD’s calculation of the refund, asserting that blended rates were not allowed under Idaho law and applied the higher rate to the entire fiscal year. WAFD filed a Written Petition for Redetermination with the Tax Commission, which upheld the Division’s determination. WAFD subsequently filed a complaint seeking relief in Ada County district court. The district court granted summary judgment in favor of WAFD and applied the lower tax rate to its entire fiscal year because Idaho Code section 63-3025, as amended, expressly stated that the lower tax rate applied to all “taxable years commencing on and after January 1, 2001.” The Tax Commission appealed to the Idaho Supreme Court. For the reasons set forth below, we affirm the district court’s decision. I. FACTUAL AND PROCEDURAL BACKGROUND WAFD is a Washington corporation that operates as a holding company for multiple corporate entities. It files a combined corporate tax return in Idaho each year and utilizes a fiscal year for financial reporting and filing corporate income taxes, which commences on October 1 and ends on September 30. Idaho’s corporate tax rate is set forth in Idaho Code section 63-3025. The Idaho Legislature amended section 63-3025(1) in 2021, reducing the corporate income tax rate from 6.925% to 6.5% “[f]or all taxable years commencing on and after January 1, 2001.” Pursuant to an emergency clause, the amendment became effective as of January 1, 2021. Act of May 10, 2021, ch. 342, §§ 3, 5, 2021 Idaho Sess. Laws 1039, 1042. Since then, the legislature has twice amended section 63- 3025(1), in 2022 and 2025, further reducing the corporate tax rate. Act of Feb. 4, 2022, ch. 1, § 3, 2022 Idaho Sess