How Much Is Idaho’s State Income Tax?

Idaho’s state income tax represents a significant portion of the state’s revenue, funding various public services and programs. This tax is levied on both individuals and businesses, with a focus on individual income for residents. Understanding the structure of this tax is important for individuals living in Idaho or those considering making the state their home.

Idaho’s Income Tax Rate Structure

Idaho transitioned to a flat individual income tax system for the 2024 tax year, simplifying its previous graduated rate structure. The current state income tax rate is 5.695% for all taxpayers. This single rate applies to taxable income above specific thresholds, which are $2,500 for single filers and $5,000 for those filing jointly.

While the state previously used a progressive system with multiple brackets, the current structure aims to apply a uniform rate across most income levels.

Components of Taxable Income

Calculating Idaho’s state income tax begins with determining your gross income, which includes earnings from wages, salaries, interest, dividends, and business activities. Idaho generally aligns with federal tax treatment, using federal Adjusted Gross Income (AGI) as the starting point for state tax calculations. Various adjustments can then reduce your gross income to arrive at your AGI for Idaho purposes. These adjustments might include contributions to certain retirement accounts or student loan interest, reflecting federal guidelines.

From this adjusted gross income, taxpayers can subtract either the Idaho standard deduction or itemized deductions, whichever provides a greater tax benefit. For the 2024 tax year, the Idaho standard deduction amounts mirror the federal standard deduction: $14,600 for single filers and $29,200 for those married filing jointly. Additionally, Idaho allows specific deductions such as a deduction for child and dependent care expenses, which increased to $12,000 annually, and a 60% deduction for net capital gains from the sale of qualified Idaho property.

Available Tax Credits

Idaho offers various tax credits that can directly reduce a taxpayer’s final state income tax liability, providing a dollar-for-dollar reduction. One widely utilized credit is the grocery credit, which is $120 per person for most Idaho residents and an additional $20 for individuals aged 65 or older. This credit aims to offset sales tax paid on groceries throughout the year and is refundable, meaning taxpayers can receive the full amount even if they owe no state income tax.

Another notable credit is the non-refundable Child Tax Credit (CTC), which provides $205 for each qualifying child under the age of 17. This credit helps families with the financial responsibilities of raising children, though its non-refundable nature means it can only reduce tax liability down to zero. Idaho also provides a credit for contributions made to eligible educational and cultural organizations, allowing individuals to claim up to $500 and married couples up to $1,000. Newer credits, such as the refundable Parental Choice Tax Credit, offer up to $5,000 for eligible nonpublic school expenses.

Steps for Calculating Your Tax

To calculate your Idaho state income tax, begin by determining your total gross income from all sources. Next, subtract any allowable adjustments to arrive at your Idaho Adjusted Gross Income (AGI). From your AGI, deduct either the Idaho standard deduction or your itemized deductions to determine your Idaho Taxable Income.

Once your Idaho Taxable Income is established, apply the state’s flat income tax rate of 5.695% to this amount to find your preliminary tax liability. Finally, subtract any qualifying tax credits, such as the grocery credit or child tax credit, to arrive at your net Idaho income tax owed. For precise figures and personalized guidance, consulting the Idaho State Tax Commission website or a tax professional is advisable.