How Idaho income tax works: federal taxable income, rebuilt, at 5.3%

Idaho has a flat tax, and the rate is the least interesting thing about it. The return starts from federal adjusted gross income on Form 40 line 7, but it does not stop there. Lines 13 through 18 take the federal standard deduction or federal itemized deductions, the qualified business income deduction and the whole package of new federal deductions for tips, overtime, seniors and car-loan interest, all over again. What is left is very nearly federal taxable income, adjusted by Idaho’s own additions and subtractions on Form 39R. The state then skips the first $9,622 (verify) on a joint return, $4,811 on a single one (2025 figures; the indexed 2026 amounts are to come), and taxes the rest at 5.3%. There are no brackets above that, no local income tax anywhere in the state, and no personal exemption; in its place, a refundable $155 food tax credit for every person on the return.

Because the deductions ride along, Idaho follows the federal return more closely than most states that tax income. A deduction that cuts federal taxable income usually cuts Idaho taxable income by the same dollars, and at 5.3% that is worth $53 for every $1,000. The 2025 federal tax law reached Idaho almost whole for the same reason: once the Legislature adopted the new Internal Revenue Code in House Bill 559, signed February 10, 2026, the no-tax-on-tips, overtime, senior and car-loan deductions landed on Form 40 line 18 without any further work. The exceptions are on the business side, and the biggest is bonus depreciation, which Idaho has refused for years.

Who files

A full-year resident files Form 40 and reports all income, wherever earned, taking a credit on Form 39R for tax paid to another state on income taxed by both. Part-year residents and nonresidents file Form 43 with Form 39NR, which carves out the Idaho share. A resident is required to file when gross income reaches the federal filing threshold for the filing status, $31,500 joint or $15,750 single for 2025 (the 2026 thresholds follow the new federal standard deduction); a nonresident files when Idaho-source gross income is more than $2,500. Married couples use the filing status they used federally. Idaho is a community property state, which matters on separate returns and when one spouse lives elsewhere. Many people below the threshold file anyway, because the food tax credit is refundable and withholding comes back only to those who ask. The residency rules themselves are in Moving to Idaho.

Where it starts: federal AGI, then the deductions again

Line 7 of Form 40 is federal adjusted gross income, line 11 of the 1040. Lines 8 and 10 bring in Idaho’s additions and subtractions from Form 39R, and line 11 is total adjusted income, the Idaho version of AGI. Then the form does something the typical state return does not: it rebuilds the bottom half of the federal return.

• Line 16, the standard deduction. Idaho uses the federal amount, as indexed, including the extra amounts for age 65 and blindness, with the boxes on line 12 matching the federal return. For 2026 the federal figures are $32,200 joint, $16,100 single or married filing separately and $24,150 head of household; the Department’s July 2026 withholding tables already use $32,200 and $16,100 as the point where the 5.3% starts. The 2025 Form 40 carried $31,500, $15,750 and $23,625.
• Lines 13 through 15, itemized deductions. An itemizer starts from federal Schedule A on line 13, then on line 14 backs out the state and local income tax, or general sales tax, that was deducted there. Idaho does not let you deduct Idaho income tax from Idaho income tax. Line 15 is what is left, and line 17 takes the larger of line 15 or the standard deduction. The addback is why many Idahoans who itemize federally take the standard deduction here: a couple with $12,000 of mortgage interest, $4,000 of property tax and $18,000 of state income tax itemizes federally at $34,000 but has only $16,000 after line 14, well under $32,200.
• Line 18, QBI and the Schedule 1-A deductions. This line is the sum of federal Form 1040 lines 13a and 13b: the 20% qualified business income deduction and the new Schedule 1-A deductions for tips, overtime pay, the $6,000 per-person senior deduction and car-loan interest. They come across at their federal amounts, phase-outs and all. Idaho adds nothing back.

Line 19, Idaho taxable income, is line 11 minus lines 17 and 18. For a household with no Form 39R items, it is federal taxable income to the dollar, plus any state income tax that was pulled out of Schedule A.

The additions

Form 39R Part A lists them, and most households have none.

Interest on other states’ bonds. Municipal bond interest is exempt federally, and interest on Idaho bonds stays exempt here, but interest on bonds issued by other states and their cities is added back on line 1. A brokerage statement that lumps all tax-exempt interest together has to be split.

Bonus depreciation. Idaho has not followed federal bonus depreciation for years, and House Bill 559 kept that stance. A sole proprietor, landlord or farmer who claimed bonus depreciation on a federal Schedule C, E or F adds it back on Part A line 5 and figures Idaho depreciation without it; in later years, when Idaho depreciation exceeds federal, the difference comes off on Part B line 21. The totals match over the life of the asset. The timing does not.

Smaller ones. A capital loss carryover incurred before you moved to Idaho (line 2). A nonqualified withdrawal from an IDeal college savings account (line 4). Idaho medical savings account withdrawals that were not for medical costs. The lottery and claim-of-right items the form lists.

The subtractions

Form 39R Part B is where Idaho gives money back, and it is a long list.

Line numbers are from the 2025 Form 39R. The 2026 form was not published when this was written.

Three of these do most of the work. Social Security comes off in full, which for a retired couple can be $30,000 or more. The retirement benefits deduction is large but narrow: it covers four kinds of pension and leaves PERSI, private pensions, IRAs and 401(k)s fully taxed; the whole story is in Idaho for retirees. And the capital gains deduction knocks 60% off the gain on Idaho land, a rental house, farm equipment, cattle or timber held long enough, while doing nothing for a stock portfolio. The IDeal deduction is the one most often missed, because the federal return never asks about 529 deposits; see Credits and breaks for Idaho families.

The rate

Idaho taxable income goes to the rate schedule on line 20. For 2025 the schedule read 0% on the first $4,811 single or married filing separately and 5.3% on everything above; for joint, head of household and qualifying surviving spouse returns the zero bracket was $9,622. The 2026 amounts are indexed and had not been published when this was written. Capital gains, dividends, interest, rent, unemployment and gambling winnings are taxed at the same 5.3% as wages. There is no preferential rate for gains beyond the Form CG deduction, and there is no city, county or school district income tax in Idaho.

The rate was 5.695% for 2024. House Bill 40, signed March 6, 2025, cut it to 5.3% retroactive to January 1, 2025, and the 2026 session left it alone.

The credits

Idaho’s credits fall into two groups: nonrefundable credits that reduce the tax on line 20, and refundable credits that sit with the payments and can produce a refund on their own.

There is no Idaho earned income credit and no Idaho dependent care credit. Idaho has no estate, inheritance or gift tax.

The food tax credit does the work a personal exemption does in other returns. It was raised to $155 and renamed from the grocery credit by House Bill 231 in 2025, and the Department’s April 2026 release put the number of residents who filed a return only to collect it at more than 101,000 for 2024. Residents 65 or older who are not required to file claim it on Form 24; everyone else who is below the filing threshold files a Form 40 to get it. The child tax credit is the credit people will look for and not find: Senate Bill 1450 to make it permanent was introduced March 31, 2026 and died in committee when the Legislature adjourned two days later, and the Department rewrote its withholding tables on July 23, 2026 to take it out.

The $10 nobody expects

Line 31 is the permanent building fund tax, a flat $10 owed by everyone required to file an Idaho return. It pays for state buildings and has been on the form for decades. It is not owed by anyone with gross income below the filing threshold, by anyone receiving Idaho public assistance at year end, or by a taxpayer or spouse who is legally blind.

Use tax

Line 28 asks for 6% use tax on purchases that were not charged Idaho sales tax, mostly online orders from sellers who did not collect. Most sellers of any size now collect, so for most households the line is small or zero, but it is a real tax and the Department can assess it on audit.

How the tax gets paid in

Wages are withheld on under Form ID W-4, and the Department publishes an estimator at tax.idaho.gov/w4. The withholding tables issued in July 2026 start the 5.3% at $16,100 of annual wages single and $32,200 married, which mirrors the standard deduction and means a wage earner with no other income usually comes out close. Pension payers and IRA custodians will withhold Idaho tax if asked; since most retirement income is taxable here, retirees often should ask.

Idaho does not require estimated payments from individuals and charges no underpayment penalty. That is unusual and it has a catch. If you expect to owe a large balance from self-employment, a sale or a conversion, nothing forces you to pay during the year, but anything unpaid on April 15 draws interest at 6% a year (the 2026 rate; the 2027 rate is to come), and the automatic extension to file depends on having paid in enough by April 15. Form 51 is a voluntary prepayment voucher, with a worksheet, and tax.idaho.gov/epay takes payments at any time.

How to file

Most Idaho returns are e-filed with the federal return through commercial software; the Department lists free offers for qualifying taxpayers at tax.idaho.gov/freefile each season, and if you e-file both returns you must use the same software for both. Taxpayer Access Point (TAP) takes payments and shows account history but cannot file an income tax return. The 2026 return is due April 15, 2027. The extension to October 15, 2027 is automatic, with no form to send, if by April 15 you have paid in, through withholding, Form 51 payments and credits, at least 80% of the 2026 Idaho tax or 100% of the 2025 Idaho tax. Miss both tests and the late-filing penalty applies on top of the interest. An amended return is a Form 40 or 43 with the amended box checked. E-filed refunds take about seven to eight weeks after acknowledgment, longer for a first-time Idaho filer or after an identity-verification letter. The dates and forms are collected in Idaho calendar and forms.

One more deadline: when the IRS changes your federal return, Idaho must be told. The 2025 instructions say within 120 days of the final federal determination; the Department’s September 2026 publication on federal changes says 180 days. Until the two agree, treat 120 as the safe number.

What trips people up

• Itemizing in Idaho because you itemized federally, without backing out the state income tax on line 14, or without checking whether the standard deduction is now larger.
• A pension left taxable on the assumption that Idaho exempts retirement income. Only Social Security, railroad retirement and the four pension types on line 8 come off.
• The $205 child credit claimed from memory of last year’s return.
• The food tax credit claimed for a month someone in the household received SNAP, or for a dependent claimed on someone else’s return.
• An IDeal contribution nobody mentioned, because the federal return did not ask.
• Bonus depreciation on a Schedule C, E or F carried into Idaho without the Part A addback.
• The 60% capital gains deduction claimed on stock, or on property outside Idaho.
• Out-of-state municipal bond interest left off Part A line 1.
• Treating the extension as an extension to pay, or assuming it is automatic when less than 80% was paid in.