Idaho Tax Guide 2026

Personal income tax — the flat-tax shift

Idaho moved from a 7-bracket structure (top 7.4% in 2011) to a 4-bracket schedule (2022) and then to a flat 5.8% (2023, HB 1 of First Special Session 2022), then to 5.695% effective for tax years beginning on or after January 1, 2025 (2024 HB 1). The 5.695% flat rate applies to taxable income above: • $5,000 (single, HoH) • $10,000 (MFJ) Income below those thresholds is taxed at 0% — a built-in zero bracket. Idaho conforms to FEDERAL standard deduction ($15,000 single / $30,000 MFJ for 2026). No state-level personal exemption. Idaho conforms to FEDERAL QBI §199A — the deduction flows to Idaho taxable income.

Idaho's 60% capital gains deduction

Idaho Code §63-3022H provides a 60% deduction for net capital gain from the sale of QUALIFYING IDAHO PROPERTY held > 12 months. Qualifying property includes: • Real property in Idaho • Tangible personal property in use in Idaho • Stock in an Idaho-domiciled S-corp where the corporation owns qualifying Idaho property Does NOT apply to: gains on publicly-traded stock, mutual funds, non-Idaho real estate. Effective rate on qualifying Idaho LTCG: 5.695% × 40% = 2.278% — meaningful for in-state real estate investors and Idaho-business sellers. No subtraction for short-term gains.

Sales and use tax — the simplest in the West

State rate 6% (Idaho Code §63-3619). Idaho generally PROHIBITS local sales taxes EXCEPT for limited resort cities, where voter approval allows up to a few percentage points: • Sun Valley: +3% (~9% combined) • Ketchum: +3% • McCall: +1% • Stanley: +1% • Crouch: +1% • Eagle: 0% Combined statewide average: ~6.02%. Groceries: TAXED at 6%, but residents receive an annual grocery tax credit ($120/person 2024, indexing). Effectively neutralizes grocery tax for low/middle-income families. Clothing: taxed. Services: largely exempt (Idaho is a goods-focused sales tax). Economic nexus (Wayfair, Idaho Code §63-3611): $100,000 in cumulative sales.

Property tax and circuit breaker

Statewide average effective ~0.67%. Counties handle assessment and collection. Ada County (Boise): ~0.65%, Bonneville (Idaho Falls) ~0.71%, Canyon ~0.79%, Kootenai ~0.55%. Homeowner's exemption: 50% of primary residence value up to $125,000 (Idaho Code §63-602G), indexed. Property Tax Reduction (circuit breaker, Idaho Code §63-701): up to $1,500 reduction for low-income seniors, widows, disabled, and disabled veterans. HB 292 of 2023 created a new Tax Relief Fund that funds homeowner relief and bond/levy supplemental funding — adjusting effective bills downward. No personal property tax on most household goods.

Business considerations

Corporate income tax: 5.695% flat (Idaho Code §63-3025) — matches individual. Minimum tax $20 for active corporations. LLC: $100 filing fee + $0 annual report (must file online by anniversary; paper filing is $20). Idaho is among the cheapest states for LLC maintenance. Apportionment: single-sales factor for most industries (Idaho Code §63-3027). Self-employment in Idaho: 5.695% flat + federal SE 15.3% + federal income tax. No state SE add-on. PTET is NOT YET enacted in Idaho (2024 legislative session declined; 2026 may revisit). No estate, inheritance, or gift tax. Unemployment tax: 0.252%–5.4% on first $55,300 wage base.

Worked example: Sarah McAllister, Boise tech consultant (single, 2026)

Sarah operates a single-member LLC consulting for remote tech clients. Net SE income $180,000. Owns a $480,000 home in Boise.

Federal: SE tax + federal income tax + §199A 20% QBI (services SSTB — phases out above $241,950 single 2026; she's under threshold → full 20% QBI). Idaho: Federal AGI flow: $180,000 (after half-SE deduction $12,762, net AGI $167,238) Less standard deduction: $15,000 Less Idaho QBI (federal conformity, 20% × $180k − wage limits): $36,000 Taxable: ~$116,238 Tax: ($116,238 − $5,000) × 5.695% = $6,335 Property tax: ($480,000 − $125,000 exemption) × 0.65% = $2,308/yr Sales tax: ~6% on taxed purchases Idaho total income tax burden: ~$6,335 — among the most competitive in the Mountain West for her income level.

Statute references

• Personal income tax 5.695% flat — Idaho Code §63-3024 (2024 HB 1)
• 60% capital gains deduction (Idaho property) — Idaho Code §63-3022H
• Sales tax 6% — Idaho Code §63-3619
• Economic nexus (Wayfair) — Idaho Code §63-3611
• Corporate income tax 5.695% — Idaho Code §63-3025
• Homeowner's exemption — Idaho Code §63-602G
• Property tax circuit breaker — Idaho Code §63-701

Related pages

• State Tax Comparison →
• QBI §199A Deduction →
• Self-Employment Tax →