Idaho does have a state income tax
Yes, Idaho charges state income tax on wages, investment income, and other earnings. Unlike seven states that have no income tax at all, Idaho taxes most forms of personal income. The state uses a progressive tax system, meaning the rate you pay depends on how much you earn — higher earners pay a higher percentage.
Idaho's top income tax rate is 5.8%, but most people pay less because the state has multiple tax brackets. A single filer earning $20,000 pays a different rate than someone earning $100,000. The exact amount you owe depends on your filing status, total income, and whether you claim deductions or credits.
Key Takeaways
- Idaho has a state income tax with rates ranging from 1% to 5.8% depending on your income level and filing status.
- The state uses a progressive tax bracket system where higher earners pay a higher percentage of their income.
- You must file an Idaho state tax return if you earn income in the state, even if you work remotely for an out-of-state employer.
- Idaho offers a standard deduction and allows itemized deductions, which can lower the amount of income you actually pay tax on.
- If your employer withholds Idaho taxes from your paycheck, you may receive a refund when you file your return.
How Idaho's tax brackets work
Idaho divides income into brackets, and you pay the stated rate only on income that falls within each bracket. For 2024, a single filer pays 1% on the first portion of income, then 3% on the next portion, then 4.5%, and finally 5.8% on the highest portion. The exact dollar amounts where each bracket begins and ends change each year.
This means you do not pay 5.8% on all your income just because you reach the top bracket. If you earn $50,000 as a single filer, only the portion above a certain threshold is taxed at the higher rate. The brackets for married filers filing jointly are wider, so couples often pay less total tax than two single filers with the same combined income.
Idaho publishes updated bracket amounts each year on the Idaho State Tax Commission website. Your employer or tax software will use the current year's brackets to calculate what you owe.
Who must file an Idaho state return
You must file an Idaho state tax return if you lived in Idaho for any part of the tax year and earned income there. This includes W-2 wages from an employer, self-employment income, rental income, and investment income. Even if you work remotely for a company based in another state, if you live in Idaho, you owe Idaho state tax on that income.
The income threshold for filing varies by age and filing status. A single person under 65 typically must file if their income exceeds the standard deduction amount for that year. Retirees over 65 have a higher threshold. If you are claimed as a dependent on someone else's return, the rules are different — you may need to file even with lower income.
If your employer withholds Idaho taxes from your paycheck, you should file a return to report those withholdings, even if you would not otherwise be required to file. Filing ensures you receive any refund you are owed.
Standard deduction and itemized deductions
Idaho allows you to reduce your taxable income using either the standard deduction or itemized deductions, whichever is larger. The standard deduction is a flat amount set by the state each year. For 2024, the standard deduction for a single filer is one amount, and for married filers filing jointly it is higher. These amounts increase slightly each year.
If your mortgage interest, property taxes, charitable donations, and other deductible expenses add up to more than the standard deduction, you can itemize instead. Most people use the standard deduction because it is simpler and often results in a larger deduction.
Idaho also offers tax credits for certain situations — such as having dependent children, paying for child care, or earning low income. Credits directly reduce the tax you owe, dollar for dollar, so they are more valuable than deductions.
How withholding works on your paycheck
When you start a job in Idaho, your employer asks you to complete a W-4 form to determine how much state income tax to withhold from each paycheck. The amount withheld is an estimate based on your expected annual income and filing status. Your employer sends this withheld money to the Idaho State Tax Commission on your behalf.
If your employer withholds too much, you receive a refund when you file your return. If too little is withheld, you owe the difference. You can adjust your withholding during the year by submitting a new W-4 to your employer if your situation changes — such as getting married, having a child, or taking a second job.
Self-employed people do not have an employer to withhold taxes, so they must pay estimated tax quarterly directly to the state. This is separate from federal estimated tax payments.
Filing your Idaho state return
You file your Idaho state return using Form 40, the standard individual income tax return. You can file on paper by mailing it to the Idaho State Tax Commission, or you can file electronically through the state's website or using tax software. Electronic filing is faster and reduces errors.
The important date to file is typically April 15, the same as the federal important date. If you need more time, you can request an extension, which gives you until October 15 to file. An extension to file is not an extension to pay — if you owe taxes, you should pay by April 15 to avoid penalties and interest, even if you file your return later.
When you file, you report all income you earned during the year, claim your deductions and credits, and calculate the total tax you owe. You then subtract any withholding your employer made and any estimated payments you sent in. The result is either a refund or an amount you still owe.
Special situations and credits
Idaho offers several tax credits that can reduce or eliminate your state income tax liability. The Earned Income Tax Credit (EITC) is available to low- and moderate-income workers and can result in a refund even if you owe no tax. The Child and Dependent Care Credit helps offset the cost of child care. Retirees may may have access to for a Retirement Income Exclusion that allows them to exclude certain retirement income from taxation.
If you paid taxes to another state on the same income, Idaho allows a credit for taxes paid to that state to prevent double taxation. Military members stationed in Idaho may have different rules depending on their residency status. If you are not sure whether a credit applies to you, the Idaho State Tax Commission website has detailed information about each one.
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 state income tax on your wages. Your employer may not withhold Idaho taxes automatically, so you may need to make estimated tax payments or adjust your federal withholding to cover the state tax you will owe.
What happens if I do not file an Idaho state return?
If you owe taxes and do not file, the state can assess penalties and interest on the unpaid amount. If you are owed a refund, you have a limited time to claim it — typically three years. Filing even if you do not owe ensures you do not miss a refund.
Can I file my Idaho return online?
Yes. The Idaho State Tax Commission website offers electronic filing options, and most tax software packages support Idaho returns. Electronic filing is faster than mailing a paper return and provides confirmation that the state received your return.
Does Idaho tax Social Security income?
No. Idaho does not tax Social Security benefits. However, other types of retirement income, such as pensions and distributions from retirement accounts, may be subject to Idaho income tax unless they may have access to for the Retirement Income Exclusion.
What is the difference between a tax refund and a tax credit?
A tax credit reduces the amount of tax you owe. A refund is money the state sends back to you after you file your return, usually because you overpaid through withholding or estimated payments. Some credits are refundable, meaning you can receive money back even if you owe no tax.