What’s new in Idaho for 2026: the federal law came through, the child credit did not

If you file in Idaho, the 2026 return will look like the 2025 return with one line missing. House Bill 559, signed February 10, 2026, conformed Idaho to the Internal Revenue Code as of January 1, 2026, retroactive to the start of 2025, so the federal deductions for tips, overtime, the $6,000 senior deduction and car-loan interest all flow onto Form 40 line 18, and the larger federal standard deduction flows onto line 16. Those were already on the 2025 return once the Tax Commission rebuilt its forms in March. What is gone for 2026 is Form 40 line 24, the $205 credit per child 16 or younger. It was written to run through tax year 2025, a bill to extend it died when the Legislature adjourned April 2, 2026, and the Idaho State Tax Commission rewrote its withholding tables in July to stop withholding for it. The rate stays at 5.3%, the food tax credit stays at $155 a person, and there is no estimated-payment requirement to worry about. For a family with two children, the net of all this is a few hundred dollars more Idaho tax than last year at the same income.

The conformity bill: what reached the Idaho return

Idaho conforms to the federal code as of a fixed date, and moves that date by statute every session. The 2026 bill, House Bill 559, moved it to January 1, 2026, which swept in the federal law of July 2025 nearly whole. The Tax Commission’s February 17, 2026 release lists what came with it: the larger standard deduction amounts, the enhanced senior deduction, the deduction for qualified tips, the deduction for overtime compensation, and the deduction for car loan interest. Because the bill was retroactive to January 1, 2025, all of them applied to the 2025 return being filed at the time, which is why 2025 refunds ran late while forms and software were rebuilt.

The mechanics are simple because of where Idaho starts. Form 40 line 7 is federal AGI. Lines 13 through 16 take the federal itemized deductions (less the state and local income or sales tax on Schedule A) or the federal standard deduction. Line 18 takes federal Form 1040 lines 13a and 13b together: the qualified business income deduction and the total of the new Schedule 1-A deductions. Nothing on the Idaho return asks you to recompute any of them. Part-year residents and nonresidents on Form 43 apportion the Schedule 1-A deductions on Idaho Worksheet 1-A.

The 2026 Form 40 and its instructions had not been published when this was written; line numbers are from the 2025 form, which the Tax Commission revised March 2, 2026. The Idaho Legislature’s cost estimate for the bill was $155 million in fiscal 2026 and $175 million in fiscal 2027 (verify).

Two exceptions are business items. Idaho has refused federal bonus depreciation for years and kept refusing it; a sole proprietor, landlord or farmer who takes 100% bonus federally adds it back on Form 39R and recovers it as regular Idaho depreciation over the asset’s life. And Idaho allows full expensing of research costs from 2025 forward but did not adopt the federal catch-up for amounts amortized in 2022 through 2024. Neither touches a wage earner or a retiree.

The child tax credit is gone

Idaho Code section 63-3029L gave a nonrefundable credit of $205 for each qualifying child 16 or younger, on Form 40 line 24. The statute applied to tax years 2018 through 2025 and no further. Senate Bill 1450, introduced March 31, 2026 to make the credit permanent, died in committee when the Legislature adjourned April 2. The Tax Commission’s July 31, 2026 release to employers says plainly that the credit “has ended” under section 63-3029L, and the revised percentage-method table dated July 23, 2026 applies 5.3% to annual wages over $16,100 for a single person or head of household and over $32,200 for a married person, with no child allowance to subtract.

For 2026, then, a child adds nothing to the Idaho return except the refundable $155 food tax credit on line 43. Idaho has no earned income credit and no child care credit; the child care break is a deduction on Form 39R Part B line 6. Two children at $205 each is $410 of Idaho tax a family paid less in 2025 than it will for 2026. The larger standard deduction gives a little of that back.

What did not change

The rate. 5.3% on Idaho taxable income after the zero bracket. House Bill 40 (2025) cut it from 5.695% effective January 1, 2025, and the 2026 session passed no rate bill. The zero bracket, $4,811 single or married filing separately and $9,622 for everyone else on the 2025 return, is indexed; the 2026 amounts are to come with the 2026 instructions.

The food tax credit. $155 per person for you, your spouse and each qualifying dependent, refundable, or the actual Idaho sales tax paid on food up to $250 per person with receipts. House Bill 231 (2025) set the $155 and renamed it from the grocery credit; nothing in 2026 changed it, and the 2026 figure is to come. The credit is reduced for any month a person received federal food stamps, was incarcerated or was in the country illegally. Residents 65 or older who are not required to file claim it on Form 24; residents under 65 who are not required to file use Form 40.

No estimated payments. Idaho still requires none from individuals and has no underpayment penalty. The one test is the automatic extension: pay in at least 80% of the 2026 Idaho tax or 100% of the 2025 Idaho tax by April 15, 2027, through withholding and voluntary Form 51 payments, and the return can wait until October 15. Interest runs at 6% a year on tax paid after April 15 (the 2026 rate; the 2027 rate is to come).

The retirement picture. Social Security comes off in full on Form 39R Part B line 7. The retirement benefits deduction on line 8, $48,216 single and $72,324 joint for 2025 (2026 maximums to come), still reaches only Civil Service Retirement System annuities, military retirement and Idaho firefighter and police pensions. The widened military eligibility, for retirees who are disabled, 62 or older, or under 62 and employed with enough income to require a federal return, came in with House Bill 40 for 2025 and carries into 2026. Details are in Idaho for retirees.

Parental Choice Tax Credit, year two

The refundable credit for nonpublic K-12 expenses, up to $5,000 per student or $7,500 for a student with a qualifying disability, is in its second year. For the 2025 credit, applications ran from January 15 to March 15, 2026, then reopened May 21 through August 15, 2026 for the roughly $7 million that remained of the program’s nearly $50 million. Priority goes to households whose modified AGI does not exceed 300% of the federal poverty level, then first come, first served. By May 19 the Tax Commission had taken 6,069 applications covering 10,809 students and awarded $33.4 million in credits and $8.84 million in advance payments.

Two things matter for 2026. First, a family that applied in 2026 for an advance payment, rather than the credit, received the money during 2026 and must reconcile it on the Parental Choice dashboard in Taxpayer Access Point by December 31, 2027, repaying anything spent outside the law or without receipts. The 2026 advance payment is taxable on the 2026 federal return. Second, House Bill 934 (2026) changed the advance-payment rules: the student must be at least 5 and no older than 19 by December 31, 2026 (22 with a qualifying disability), and funds cannot be used for a semester the student was enrolled in a public school, with exceptions for sports, non-credit activities and unpaid Idaho Digital Learning Alliance courses (verify). The credit itself is claimed on Form 40 line 42, only up to the amount awarded, and only after the award notice arrives. The application window for the 2026 credit, to be filed on the 2027 return, had not been announced when this was written.

Smaller items

Reporting a federal change. The Tax Commission’s September 2026 publication on federal filing changes says to notify Idaho within 180 days of the final federal determination. The 2025 Form 40 instructions, revised in March 2026, still say 120 days. Use 120 to be safe until the 2026 instructions settle it (verify).

Withholding. Anyone who filed an Idaho Form ID W-4 claiming children should file a new one; the July 2026 tables no longer carry a child allowance, and employers were told to use the revised tables going forward without recalculating earlier months.

Printed booklets. The Tax Commission stopped printing tax booklets with the 2025 season. Forms and instructions are at tax.idaho.gov/IITforms.

Ballot measures. No statewide income, sales or property tax measure was found on Idaho’s November 3, 2026 ballot.