Idaho Tax Rates

This post provides an overview of the primary taxes levied at the state level in Idaho. The information contained here is intended for general reference. For individuals or businesses seeking comprehensive support with tax filings, compliance, or strategic planning, indinero offers expert services. We encourage all who utilize this summary to explore the tailored tax support available through indinero.

Individual Income Tax

Idaho utilizes a flat rate individual income tax system, having transitioned from a progressive structure to simplify the code.

  • Tax Rate: The rate is a flat 5.3% of taxable income (effective for tax years beginning on or after January 1, 2025). This flat rate applies to taxable income over a minimum threshold ($2,500 for single filers and $5,000 for married couples filing jointly).
  • Retirement Income: Social Security benefits are not taxable in Idaho. The state also allows an income tax deduction for certain military retirement pay, benefiting veterans.
  • Capital Gains: The state offers a deduction for certain net capital gains, which reduces the amount of investment income subject to the state income tax.

Sales and Use Tax

Sales tax is a significant source of state revenue in Idaho.

  • State Rate: The general state sales tax rate is 6.0% on the retail sale of tangible personal property, leases, and specific services.
  • Local Taxes: Idaho has a very low average local sales tax rate, meaning the combined state and local sales tax rate averages only about 6.03% statewide. However, some areas, particularly resort communities, may impose special local option taxes that can raise the total rate up to 9%.
  • Tax on Groceries: Unlike many states, Idaho taxes groceries (unprepared food). To offset this, the state offers a refundable Groceries Tax Credit of $120 per person per year (and $140 for those over 65) to residents.
  • Exemptions: Prescription medicine is exempt from sales tax.
  • Use Tax: A state use tax of 6.0% applies to taxable items purchased outside of Idaho but stored, used, or consumed in the state if Idaho sales tax was not collected.

Property Tax (Ad Valorem Tax)

Property taxes in Idaho are collected at the local level by counties, municipalities, and school districts, and they are generally low compared to the national average.

  • Assessment: All taxable property is required to be assessed at 100% of its current market value as of January 1 each year.
  • Tax Calculation: The tax is determined by multiplying the taxable value by the local millage rate. The local millage rates vary based on the budgetary needs of the numerous independent taxing districts (e.g., school districts, fire districts).
  • Homeowners Exemption: Idaho offers a substantial Homeowners Exemption on owner-occupied primary residences. This exempts 50% of the property’s value up to a statutory maximum (currently capped at $125,000) from taxation, significantly lowering the property tax burden for most homeowners.

Corporate Income Tax

Idaho imposes an income tax on corporations that do business in the state.

  • Tax Rate: The corporate income tax rate is a flat 5.3% of the corporation’s Idaho taxable net income (effective for tax years beginning on or after January 1, 2025). This mirrors the individual income tax rate.

Apportionment: For multi-state corporations, Idaho uses the three-factor formula (property, payroll, and sales) to apportion income to the state, with sales typically weighted more heavily.

R&D Offer Quiz

Step 1 of 3

Answer to find out if you're eligible for R&D tax credits.

Do the activities performed relate to a new or improved business component’s function, performance, reliability, quality, or composition?(Required)
For Example: A mid-sized packaging company develops a slightly modified cardboard box design to improve its stacking strength (reliability) for warehouse storage, involving minor adjustments to the corrugation pattern to reduce collapse under standard weight loads.
Is your company trying to discover information to eliminate uncertainty concerning the capability or method for developing or improving a business component?(Required)
For Example: A furniture manufacturer investigates whether a cheaper wood adhesive can hold joints as effectively as the current one during assembly, testing bond strength to resolve doubts about its capability in standard production lines.
Do the activities performed constitute a process of experimentation?(Required)
For Example: An auto parts supplier runs a series of bench tests on different lubricant formulations to find one that reduces friction in engine bearings more effectively, systematically comparing wear rates over simulated operating cycles.