Tax in Idaho: a complete guide
Before moving states, you must research the relative cost of living, the lifestyle you can expect to lead, and the tax burden you’ll take on as a new Idahoan.
Idaho income tax
Until late July 2023, Idaho had a graduated income tax system with a top rate of 6.5 percent. But, just like Arizona, Idaho has now swapped that out for something slightly different. Starting immediately in the 2023 tax year, all individual and corporate income over $2,500 will be subject to a flat tax rate of 5.8 percent.
Depending on your preferences and financial situation, this could be a beneficial or negative change. Either way, it’ll undoubtedly simplify determining your tax liability – at least at the state level.
In a federal sense, you’ll still need to figure out which bracket you slot into and pay your taxes accordingly to the IRS:
| Federal income tax rate | Income as a single person OR a married person/ registered domestic partner filing separately | Income as a married person/ registered domestic partner filing jointly OR a qualifying widower | Income as a head of household |
|---|---|---|---|
| 10 percent | $0 to $11,000 | $0 to $22,000 | $0 to $15,700 |
| 12 percent | $11,001 to $44,725 | $22,001 to $89,450 | $15,701 to $59,850 |
| 22 percent | $44,726 to $95,375 | $89,451 to $190,750 | $59,851 to $95,350 |
| 24 percent | $95,376 to $182,100 | $190,751 to $364,200 | $95,351 to $182,100 |
| 32 percent | $182,101 to $231,250 | $364,201 to $462,500 | $182,101 to $231,250 |
| 35 percent | $231,251 to $578,125 | $462,501 to $693,750 | $231,251 to $578,100 |
| 37 percent | $578,126 or more for single people, $346,876 or more for married people/domestic partners filing separately | $693,751 or more | $578,101 or more |
Idaho sales tax
The sales and use tax rates in Idaho are both six percent, and one or the other will apply to most purchases you make in the state. Local sales tax rates will also apply, differing from area to area up to a total possible combined tax of nine percent. The following products/services are exempt from sales tax or use tax in the Gem State:
Prescription drugs
Specific manufacturing machinery, materials and fuel
Specific medical devices and services
Janitorial services
Specific canned and custom software
Certain so-described “bad habit items” have their own more prohibitive rates of tax, including alcohol and cigarettes. In Idaho, these rates are as follows:
| Product | Cost |
|---|---|
| Any tobacco products other than cigarettes | 40 percent of the manufacturer’s price |
| Beer | $0.15 per gallon |
| Cigarettes | $0.57 per pack |
| Liquor | $10.90 per gallon, state-controlled |
| Wine | $0.45 per gallon |
Idaho property tax
Unsurprisingly, housing is one of the most significant costs you’ll face if you relocate to Idaho.
If you’re in a position to buy a home or already own and will be selling and buying a new home in the state, you’ll need to make sure you’re accounting for the property price, the expenses associated with moving and the property tax you’ll need to pay.
Thankfully, real estate taxes in Idaho are very low compared to neighboring states like Oregon and Washington, with counties collecting an overall average of 0.69 percent of a property’s value in tax each year. Only 13 states have a lower average property tax rate than Idaho.
To give you a better sense of what to expect, here are some average annual payments across different counties:
| Idaho county | Median annual property tax payment |
|---|---|
| Ada | $2,374 |
| Bannock | $1,657 |
| Blaine | $2,226 |
| Clark | $583 |
| Elmore | $1,277 |
| Gem | $1,222 |
| Idaho | $853 |
| Payette | $1,185 |
| Washington | $1,205 |
Idaho motor tax
Motor vehicle purchases in Idaho are covered by the same standard six percent rate as most items subject to sales tax, though there are other costs to consider when buying a car/van/motorbike. Don’t forget to account for the vehicle, the tax and the registration, title and plate fees.
If you’re looking to save money on your purchase and already have an existing vehicle, note that many dealerships in the state allow you to trade in your old car in exchange for credit on your new vehicle. This credit won’t be subject to sales tax—just the amount you pay.
As for fuel, gasoline in Idaho is taxed at a rate of $0.32 per gallon, and diesel is the same.
Idaho estate tax
Two types of tax can significantly affect how much money you can receive from your loved ones when they pass away or how much you can give them when you pass away. Thankfully, no inheritance tax is levied at the state level in Idaho.
Estate tax is also not levied in Idaho. It is one of 38 states that doesn’t levy the tax. However, you will have to account for federal rules and requirements surrounding your estate and inheritance.
Idaho retirement tax
There’s a lot to love about Idaho as a retirement destination, particularly if you plan to spend your golden years appreciating the great outdoors as much as possible. Regarding how things look for retirees from a tax perspective, it’s a fairly standard picture.
Retirement income is taxed in most cases, though there are some exemptions and limited deduction options (including Railroad Retirement and Social Security benefits). Despite the lack of deductions for older people compared to other states, Idaho still ranked as the fourth most affordable state to retire to in a recent study.
For further tax guidance and to ensure you’re not paying more tax than you need to, it’s wise to speak to an expert. A financial advisor can help you handle all your tax queries and ensure you’re not paying more tax than needed.
Senior Content Writer
Rachel is a Senior Content Writer at Unbiased. She has nearly a decade of experience writing and producing content across a range of different sectors.