Idaho does have a state income tax
Idaho charges state income tax on wages, self-employment income, investment gains, and other earnings. The state uses a progressive tax system, meaning the rate increases as your income rises. For the 2024 tax year, Idaho's rates range from 1% on the lowest bracket to 5.8% on the highest.
Unlike some states that tax only certain types of income, Idaho taxes most forms of earnings. This includes W-2 wages from an employer, 1099 income from self-employment or contract work, capital gains from selling investments, and retirement account withdrawals. The specific amount you owe depends on your total income and filing status.
Key Takeaways
- Idaho's state income tax rates range from 1% to 5.8% depending on your income level and filing status.
- The state taxes wages, self-employment income, investment gains, and most other forms of earnings.
- You file Idaho state taxes using Form 40 if you are a resident, or Form 40-N if you are a nonresident with Idaho income.
- Idaho offers a standard deduction that reduces your taxable income, similar to the federal deduction.
- Some types of income, including Social Security benefits and certain retirement distributions, may be partially or fully exempt from Idaho tax.
How Idaho's tax brackets work
Idaho divides income into brackets, and you pay the stated rate only on income within that bracket. For single filers in 2024, the brackets start at 1% on income up to $1,841, then step up through several rates until reaching 5.8% on income over $7,472. Married couples filing jointly have higher bracket thresholds, so the same income may fall into a lower bracket than it would for a single filer.
The brackets adjust slightly each year for inflation. When you file your return, you calculate your total income, subtract deductions and exemptions, and then explore the appropriate rates to each bracket. This means you do not pay 5.8% on all your income—only on the portion that falls into the highest bracket you reach.
What income Idaho taxes and what it does not
Idaho taxes most ordinary income: paychecks from employers, tips, bonuses, self-employment earnings, rental income, and interest from savings accounts. It also taxes capital gains when you sell stocks, real estate, or other investments at a profit. Distributions from traditional IRAs and 401(k) accounts are taxable in the year you withdraw them.
Some income is partially or fully exempt. Social Security benefits are not taxed by Idaho, even though they may be taxable at the federal level. Certain retirement distributions, including may have access to distributions from Roth IRAs and some military pensions, may be exempt or partially exempt depending on your age and the type of account. Gifts and inheritances are not taxable income in Idaho.
Filing requirements and important date
Idaho residents file state income tax using Form 40, which is due on April 15 each year—the same important date as federal taxes. If you cannot file by that date, you can request an extension, which typically gives you until October 15. Nonresidents who earned income in Idaho file Form 40-N instead.
You must file if your income exceeds the filing threshold for your age and status. For 2024, a single person under 65 must file if their income is over $14,600. The threshold is higher for married couples and for people age 65 and older. Even if you do not meet the filing requirement, you may want to file anyway if you had taxes withheld from your paychecks, because you could receive a refund.
Deductions and credits that reduce what you owe
Idaho allows you to claim either the standard deduction or itemized deductions, whichever is larger. The standard deduction for 2024 is $14,600 for single filers and $29,200 for married couples filing jointly. These amounts reduce your taxable income before you calculate the tax owed.
Idaho also offers tax credits that directly reduce the amount of tax you owe. The Earned Income Tax Credit (EITC) helps lower-income working people and families. The Child and Dependent Care Credit covers some childcare expenses. The Residential Energy Credit applies if you made energy-efficient improvements to your home. Credits are often more valuable than deductions because they reduce your tax dollar-for-dollar rather than just reducing your taxable income.
How to file your Idaho state taxes
You can file by mail, online, or through a tax professional. The Idaho State Tax Commission provides free tax forms and instructions on its website. Form 40 and the instruction booklet walk you through calculating your income, deductions, and credits step by step.
Many people use tax software that guides them through the Idaho return and automatically calculates the correct amounts. If you use a tax preparer or accountant, they will handle the Idaho return as part of your overall tax filing. Mail your completed return to the address listed in the Form 40 instructions, or file electronically if you choose that option.
What happens if you move to or from Idaho
If you moved to Idaho during the year, you are a part-year resident and file Form 40-PY instead of Form 40. You report only the income you earned while living in Idaho and claim deductions based on the portion of the year you were a resident. If you moved out of Idaho, you file Form 40-N as a nonresident and report only income from Idaho sources.
The state considers you a resident if you lived in Idaho for more than half the tax year or if you maintained a permanent home there. Military members stationed in Idaho may have different rules, so check with the Tax Commission if you are active duty or recently separated.
Frequently Asked Questions
Does Idaho tax retirement income differently?
Social Security is not taxed by Idaho. Distributions from traditional IRAs and 401(k) accounts are taxed as ordinary income. Some military pensions and certain other retirement income may be partially exempt—check the Form 40 instructions or contact the Tax Commission to see if your specific pension qualifies.
What if I owe more tax than I can pay right away?
You can set up a payment plan with the Idaho State Tax Commission. Contact them to discuss options. You can also request an extension to file, though this does not extend the time to pay—interest and penalties accrue on unpaid taxes from the original due date.
Can I file Idaho taxes online for free?
Yes. The Idaho State Tax Commission offers free e-file options through its website. You can also use IRS Free File software if you meet the income limits, which typically includes filing both federal and state returns at no cost.
Do I have to file if I had no income?
No, unless you are claimed as a dependent on someone else's return and have unearned income like interest or dividends. If you had taxes withheld from paychecks but earned below the filing threshold, you may still want to file to get a refund.
What if I am self-employed in Idaho?
Self-employment income is taxable in Idaho. You report it on Form 40 along with your other income. You may be able to deduct business expenses to reduce your taxable income. Keep records of all income and expenses, and consider consulting a tax professional if your business is complex.