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Courses › Idaho Property Taxes in Depth

Lesson 5 of 9 · about 18 minutes

Where the Money Goes: Taxing Districts, School Funding and State Relief

You'll be able to

  • Describe how collected property tax flows from the treasurer to each district
  • Use the Tax Commission's statewide figures to describe who levies what
  • Explain which school property taxes remain after the state took over most operating costs in 2006
  • Explain how the School District Facilities Fund and School Modernization Facilities Fund reduce school levies
  • Compute the effect of facilities money on a school bond levy and a homeowner's bill

Your county treasurer sends you one bill and cashes one check. Then the money scatters. Idaho Code 63-1202 has the county auditor settle with every taxing district monthly, on the second Monday, sending each district its share of what came in, with late charges and interest. Each district's share is whatever its levy produced on the parcels inside it. The treasurer collects. The districts decide.

The statewide split

The Tax Commission's December 2025 report breaks down the $2.286 billion levied in 2025 (after school facilities reductions, before the homeowner credit):

Unit of government2021 ($ millions)2025 ($ millions)2025 shareChange, 2021 to 2025
Cities571.2705.030.8%+23.4%
Counties560.1682.429.8%+21.8%
School districts593.3404.417.7%-31.8%
Highway districts129.5154.26.7%+19.1%
All other (fire, library, cemetery, ambulance, etc.)258.6340.414.9%+31.6%
Total2,112.72,286.4100%+8.2%
Cities 30.8%Counties 29.8%Schools 17.7% Highway 6.7%Other 14.9%
Shares of property tax levied in Idaho, 2025. Source: Idaho State Tax Commission, EPB00132.

Cities and counties together levy about 60 percent. And schools, which levy the biggest share of property tax in most states, levy less than a fifth here and less every year since 2022.

Why Idaho schools levy so little

The Tax Commission's history notes two steps. In 1995 the state replaced roughly a quarter of school operating property taxes with state money. In 2006 it eliminated most of the rest. Since then the state pays most school maintenance and operation (M&O) costs from the general fund, which runs on income and sales taxes.

What school property tax remains is mostly voter-approved: bond levies, supplemental levies and plant facilities levies, plus a small emergency levy for enrollment growth (lesson 6 of the local government module covers these: Levies and Bonds). That is why a school line on a bill can jump in one year: voters approved something.

The state facilities money since 2023

Starting with House Bill 292 in 2023, the Legislature began paying down school property taxes directly.

LawWhat it did for school property tax
HB 292 (2023)Created the School District Facilities Fund (SDFF), funded by a share of sales tax; ended March school bond elections
HB 521 (2024)Created the School Modernization Facilities Fund, now $125 million of sales tax a year (63-3638(19)); set the order in which districts must spend SDFF money; ended August school elections
HB 304 (2025)Added $50 million a year to the SDFF and $50 million a year to homeowner relief, "starting in 2025 and every year there after," per its statement of purpose
HB 329 (2025), HB 722 (2026)Replaced property tax on rate-regulated electric and gas utilities with a kilowatt-hour and therm tax from 2026; every district subtracts its estimated share on its L-2

How the SDFF works, from Idaho Code 33-911:

  • The fund receives 3.25 percent of sales tax revenue (63-3638(18)), plus other transfers.
  • The Department of Education distributes it by August 31 on a per-pupil basis, using average daily attendance.
  • The money "shall be used in place of property tax levy moneys," in this order: existing school bonds issued before July 1, 2025; payments under 33-909; bonds issued on or after July 1, 2025; temporary supplemental levies; plant facilities levies. Whatever is left can go to construction, maintenance or a facilities reserve.
  • The district must subtract the amount from what it certifies, and the savings must be reported on each tax bill.

The Tax Commission's numbers show the scale. SDFF levy reductions totaled $97.7 million in 2023, $128.4 million in 2024 and $215.2 million in 2025. In 2025 the full chain looked like this: $2.502 billion in property tax budgets before relief, minus $215.2 million of SDFF reductions, gave $2.286 billion levied, minus $112.8 million of homeowner credit, gave $2.174 billion paid by taxpayers.

Example: facilities money meets a bond levy

The invented Kestrel Valley School District owes $2,400,000 this year on bonds voters approved in 2021. Its taxable value is $2,400,000,000. It has 5,000 students in average daily attendance and the SDFF pays about $230 per student this year: 5,000 x $230 = $1,150,000.

Without the fund: levy = $2,400,000 / $2,400,000,000 = 0.001000000.

With the fund: the district must apply it to its pre-2025 bonds first. It certifies $2,400,000 - $1,150,000 = $1,250,000. Levy = $1,250,000 / $2,400,000,000 = 0.000520833.

For a home with $255,000 of taxable value:

Before: $255,000 x 0.001000000 = $255.00

After: $255,000 x 0.000520833 = $132.81

Savings: $122.19, which the bill must show.

Now change one fact. A neighboring district with the same enrollment but no bonds and no levies gets the same $1,150,000. It cannot cut a levy it does not have, so it spends the money on maintenance or banks it. Same state dollars, very different property tax effect.

That last point is why the Tax Commission's report says the effect "differed widely between school districts." Per-pupil money helps most where a district has big voter-approved levies relative to its enrollment, and it helps property taxpayers least where there was little school tax to cut.

The arguments on each side

Gov. Brad Little and the sponsors of HB 304 present the funds as relief for local taxpayers and support for school buildings at once. His March 2025 statement said HB 304 relieves "the burden on local property taxpayers" for bonds, levies and plant facilities. The record supports the relief claim: school property taxes fell from $593.3 million in 2021 to $404.4 million in 2025.

The other side of the ledger is also on the record. The money comes from sales tax, which falls on every buyer in the state, including renters and visitors, and it does not depend on any local vote. Because it is distributed per pupil, its value per property owner depends on how much a district had already borrowed. And it is only as permanent as future legislatures make it: ballots for bonds and levies can mention state relief only if a specific dollar amount is guaranteed, under the disclosure laws covered in the earlier module.

Common mix-ups

  • Claim: Property taxes pay for Idaho teachers' salaries. What the evidence shows: Mostly not. The state pays most operating costs. Local property tax mainly pays for voter-approved bonds, supplementals and facilities, though supplemental levies can pay for staff.
  • Claim: The school line on my bill went down, so the district spent less. What the evidence shows: It may have received more SDFF money. Compare the district's certified budget before relief with the year before.
  • Claim: The treasurer keeps the tax. What the evidence shows: The county keeps only its own levy. Everything else goes out to the other districts monthly under 63-1202.

Reporting angle

  • Ask each school district for its SDFF and modernization fund amounts for 2023 to 2026, and what each dollar paid for, in the 33-911 order.
  • Get the district's L-2 and compare the amount levied before and after facilities money. The difference should match the line on tax bills.
  • Build a table of every taxing district on a typical bill with its 2021 and current levy dollars. The "all other" category grew fastest statewide (31.6 percent); see which ones did locally.
  • Track 2027 legislation. Each session since 2023 has changed property tax relief. Read the statement of purpose and fiscal note, then ask the Tax Commission how it will show up on bills.

Research angle

Check yourself

1. According to the Tax Commission, which type of local government levied the most property tax in Idaho in 2025?

2. Why do Idaho school districts levy relatively little property tax for day-to-day operations?

3. Under Idaho Code 33-911, what must a school district pay first with its School District Facilities Fund money?

4. A district's bond payment requires $2,400,000 and it receives $1,150,000 of facilities fund money. Taxable value is $2.4 billion. What is the bond levy rate after the facilities money?

5. What share of Idaho sales tax revenue goes to the School District Facilities Fund each year under 63-3638(18)?

Terms in this lesson

Taxing district
Any government unit that can certify a property tax: county, city, school, highway, fire, library, cemetery, ambulance and others.
Tax code area
A piece of a county where the same set of taxing districts overlap, so every parcel in it has the same total levy rate.
School District Facilities Fund (SDFF)
State money created by HB 292 in 2023 and distributed per pupil, which districts must use to pay down bond and levy obligations before property tax.
School Modernization Facilities Fund
A fund created by HB 521 in 2024 that receives $125 million of sales tax a year for school facility distributions and state building authority bonds.
Maintenance and operation (M&O)
Day-to-day school costs such as salaries, utilities and supplies, as opposed to buildings and debt.

Full glossary

Sources