Taxes in Idaho
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Idaho recently revised and simplified its tax laws, which included introducing a flat income tax rate and an annual grocery credit adjusted for inflation.
Below, we explain various state taxes affecting retirement income and your ability to live affordably in Idaho, such as sales tax, retirement tax, and property taxes. We’ve also provided details about tax credits, exemptions, tax relief programs, and retirement-related tax breaks.
For information regarding taxes in other states, see Retirement Taxes by State.
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Idaho Tax Rates
|State Sales Tax||6%|
|Avg State/Local Sales Tax||6.02%|
|Gas Tax||$0.32 per gallon|
|Diesel Tax||$0.32 per gallon|
|Cigarette Tax||$0.57 per pack|
|Effective Tax Rate:||5.77%|
|Social Security Tax||None|
|Medical/Dental Deduction:||Federal Amount|
|Federal Income Tax Deduction:||None|
Idaho State Taxes Explained
Idaho Sales Tax
6%. Prescription drugs are exempt. Some local municipalities charge up to an additional 3% sales tax. For 2023, Idaho offers a grocery tax credit of $120 ($140 for seniors) to residents who claim it on their tax return or by filling out Form 40 or 43.
Idaho Income Taxes
Beginning in 2023, a flat rate of 5.8% on taxable income over $2,500 ($5,000 for joint filers) will apply. The threshold will be adjusted annually for inflation. Prior to 2023, Idaho implemented a graduated-rate between 1% and 6%.
Idaho Property Taxes
Idaho counties levy and collect property tax to support local services and schools. The state does not levy or receive any property tax. The average effective property tax rate in Idaho is 0.69%, or $1,456 on the median home value of $212,300.
Idaho’s Property Tax Reduction (Circuit Breaker) program reduces taxes on the home and 1 acre of land up to $1,500. For 2023, homeowners aged 65 or older with an income of $33,870 or less are eligible for a property tax reduction. The reduction is also available for veterans and individuals with disabilities with no age qualification.
Idaho residents who are 65 or older with an income of $60,000 or less can defer property tax payments. Taxpayers with disabilities are eligible regardless of age. Property taxes accrue with interest. Payment is due when the property is sold or transferred or the owner dies or is no longer the Idaho Homeowner’s Exemption.
Idaho Retirement Taxes
Idaho taxes all retirement income except Social Security. Generally, all income received by an Idaho resident, regardless of the source, is subject to Idaho income tax.
Idaho’s Retirement Benefit Deduction applies to some pensions. Residents who are age 65 or older (or at least 62 or older and disabled) may deduct all or a portion of distributions from these retirement plans:
- Military retirement
- Civil Service Retirement System (CSRS if the account number begins with 0 through 4)
- Idaho’s firemen’s retirement fund (not PERSI)
- Policemen’s retirement fund of an Idaho city (not PERSI)
Retired military pay is not taxed for military retirees over 65 or disabled retirees over 62.
Idaho Estate and Inheritance Taxes
Idaho has no inheritance tax, gift tax, or estate tax.
For more tax information, visit the Idaho State Tax Commission site.