Idaho does have a state income tax
Idaho taxes your wages, investment income, and most other forms of income at the state level. Unlike seven states that have no income tax at all, Idaho operates a progressive tax system where your rate depends on how much you earn. The state tax is separate from federal income tax — you pay both.
Idaho's top state income tax rate is 5.8%, but most earners pay less because the state uses tax brackets. A single filer earning $50,000 in 2024 pays a different rate than someone earning $150,000. The state also offers a standard deduction and some tax credits that reduce what you owe.
Key Takeaways
- Idaho has a progressive income tax system with rates ranging from 1% to 5.8%, depending on your income level and filing status.
- You must file an Idaho state tax return if your income exceeds the state's standard deduction threshold, which varies by age and filing status.
- Idaho taxes wages, self-employment income, capital gains, and retirement distributions, though some retirement income may be partially exempt.
- The state offers credits for dependent children, property taxes, and other situations that can lower your total state tax bill.
How Idaho's tax brackets work
Idaho uses five tax brackets for 2024. Your income is taxed at progressively higher rates as you move up the brackets — you do not pay the top rate on all your income, only on the portion that falls within each bracket. A single filer, for example, pays 1% on the first portion of income, then 3%, then 4.5%, then 5.8% on the highest bracket.
The exact dollar amounts where each bracket begins and ends change yearly and depend on your filing status: single, married filing jointly, married filing separately, or head of household. The Idaho State Tax Commission publishes updated brackets each year. Because brackets adjust for inflation, your tax rate may stay the same even if your income rises slightly.
This structure means a single filer earning $60,000 does not pay 5.8% on the entire amount. Instead, they pay the lower rates on the first portions and only the higher rate on income above a certain threshold. That is why the effective tax rate — what you actually pay as a percentage of total income — is lower than the top bracket rate.
What income Idaho taxes and what it does not
Idaho taxes ordinary wages and salaries, self-employment income, interest and dividends, capital gains, and distributions from retirement accounts like IRAs and 401(k)s. If you receive income from any of these sources, you report it on your Idaho return.
Some income is partially or fully exempt. Social Security benefits are not taxed by Idaho. Certain retirement income may be excluded if you meet age and income requirements — the state allows a deduction for military pensions and some other retirement income, though the rules are specific. Long-term capital gains receive no special treatment in Idaho; they are taxed at the same rates as ordinary income.
If you work in Idaho but live in another state, or vice versa, you may owe tax to both states. Idaho has reciprocal agreements with a few neighboring states that can prevent double taxation, but the rules depend on which state you live in and which state you work in. You should check with both state tax authorities if your situation crosses state lines.
Filing requirements and the standard deduction
You must file an Idaho state return if your income exceeds the standard deduction for your filing status and age. For 2024, the standard deduction for a single filer under 65 is $14,600; for a married couple filing jointly, it is $29,200. These amounts increase if you are 65 or older. If your income is below these thresholds, you generally do not have to file, though filing may be worth it if you paid taxes and are due a refund.
The standard deduction reduces your taxable income before you calculate tax. If you earn $50,000 as a single filer, your taxable income is $50,000 minus $14,600, or $35,400. You then explore the tax brackets to that $35,400.
You file your Idaho return using Form 40, the state's main individual income tax form. You can file by mail or electronically through the Idaho State Tax Commission website or through tax software. The important date is the same as the federal important date, usually April 15.
Tax credits that reduce what you owe
Idaho offers several credits that directly reduce your tax bill. A dependent exemption credit provides a flat amount per dependent child. The property tax relief credit helps homeowners and renters whose property taxes or rent are high relative to their income. There is also a credit for taxes paid to other states, which prevents you from paying tax twice on the same income if you worked in multiple states.
Credits are different from deductions. A deduction reduces your taxable income; a credit reduces the tax itself. A $100 credit saves you $100 in tax, while a $100 deduction saves you tax only at your marginal rate. Idaho's credits are generally nonrefundable, meaning they can reduce your tax to zero but cannot create a refund if the credit exceeds what you owe.
The state also offers an earned income tax credit (EITC) for low-income workers. Idaho's version is a percentage of the federal EITC, so if you may have access to for the federal credit, you likely may have access to for Idaho's as well.
How Idaho income tax differs from federal income tax
Idaho and the federal government both tax your income, but they use different rates, brackets, and rules. The federal government has more brackets and higher top rates than Idaho. Federal tax also has different deductions and credits — for example, the federal standard deduction for 2024 is higher than Idaho's, and the federal child tax credit works differently than Idaho's dependent exemption credit.
You file two separate returns: Form 1040 for federal tax and Form 40 for Idaho state tax. Your federal taxable income does not automatically become your Idaho taxable income. You start with federal income, then make adjustments specific to Idaho law. For instance, if you received a federal tax refund the prior year, you may have to add that back for Idaho purposes.
Idaho allows a credit for federal income tax paid in some cases, but this is limited and applies only to certain situations. Most people straightforward pay both taxes without a credit from one to the other.
Frequently Asked Questions
Do I have to pay Idaho income tax if I work remotely for an out-of-state company?
Yes, if you live in Idaho and work remotely, you owe Idaho income tax on your wages. The state where your employer is located does not matter. However, if you live in another state and work remotely for an Idaho company, you generally owe tax to your home state, not Idaho. Some states have reciprocal agreements that affect this rule, so check your home state's rules if you live near the border.
Is retirement income taxed differently in Idaho?
Social Security is not taxed by Idaho. Distributions from IRAs and 401(k)s are taxed as ordinary income. Military pensions and some other retirement income may be partially deductible under Idaho law, but the rules depend on your age and the type of pension. You should review the specific rules or consult a tax professional if you receive retirement income.
What happens if I move out of Idaho during the year?
You file a part-year resident return for the months you lived in Idaho. You report only the income you earned while a resident. If you moved to another state, you may owe tax to both Idaho and your new state for the portions of the year you lived in each. Some states have reciprocal agreements that reduce or eliminate this double taxation.
Can I deduct federal income tax from my Idaho return?
Idaho does not allow a deduction for federal income tax paid. However, if you paid federal tax and are due a refund, that refund is not taxed by Idaho. Some states allow a federal tax deduction, but Idaho is not one of them.
Where do I find the current tax brackets and standard deduction amounts?
The Idaho State Tax Commission publishes updated brackets and standard deduction amounts each year on its website. You can also find this information in the instructions to Form 40 or by calling the commission directly. Tax software also includes current year brackets and deduction amounts.