If you’re new to the state of Idaho, chances are, the state’s tax friendliness may have been one of the main reasons you moved to the state. Or perhaps you’re already familiar with some of Idaho’s state tax code already. No matter where you stand with your knowledge of state taxes, what’s most important to remember is knowing how to file and calculate your state taxes in accordance with state tax regulations.

Using our Idaho income tax calculator, you can estimate your tax dues, expected state tax refund, and identify ways to save on your tax bill, with little effort on your part. All you need to do is provide a few details and you’ll be ready to plan for and file your annual tax return.

Want to learn more about how Idaho state taxes work? Keep reading for more information about how taxes in the Gem State impact you!

In order to learn more about how the Idaho State Tax Commission structures state tax collections, we’ll need to establish some baseline knowledge surrounding how state and federal taxes work. State taxes are controlled and collected on the state level, meaning that state governments have the power to determine what’s taxed, who’s taxed, and for how much. Additionally, state tax agencies can decide which programs and expenses taxes fund within their state.

Federal taxes are completely different than state taxes and are controlled by the Internal Revenue Service, also known as the IRS. The tax regulations the IRS imposes apply to all taxpayers in the U.S., regardless of the state they live.

What does “state tax” mean in Idaho?

Idaho is known for much more than potatoes—in fact, the state is nicknamed the Gem State for the natural abundance of precious and semi-precious gemstones that have been found there. Idaho’s also known for its breathtaking natural landscapes and wildlife in its mountainous areas.

But when it comes to state taxes, Idaho’s tax structure is relatively straightforward—income taxes and sales taxes are both mandated by the state government while local governments oversee property taxes. Refer to our “quick facts” section below to see Idaho tax rates at-a-glance; or read our guide to Idaho state taxes to learn what you need to know about filing your annual tax return in Idaho, how you can save with Idaho tax deductions and credits, and most importantly, how you can estimate your taxes in compliance with the Idaho State Tax Commission.

Quick facts: Idaho state tax rates

• Idaho state income tax rate: 1.125- 6.295%
• Idaho state sales tax rate: 6%
• Idaho state property tax rate: 0.72%

Idaho uses a set of seven different tax brackets to determine how much an individual is taxed on their annual state tax return. These brackets correspond with a range of income and filing status—the more income you make, the more taxable income you have. Let’s take a look at Idaho’s tax bracket system.

Self-employment taxes in Idaho

Idaho taxes self-employment income the same as traditional forms of income, but self-employed taxpayers should be familiar with their other tax liabilities in order to budget for their annual dues.

In addition to standard income taxes, the federal government also levies self-employment taxes (SE taxes) on income that’s earned under independent contractor status. SE taxes are equivalent to 15.3% of taxable income and cover the taxpayer’s Social Security and Medicare contributions that would have otherwise been withheld from their paycheck as a standard employee.

Now that you know how Idaho structures personal income taxes—within a set of seven brackets—let’s take a look at how you can calculate your annual state income taxes as a taxpayer in the Gem State.

Filing Single

Married, Filing Jointly

Capital gains tax is a type of tax collected on income earned from the sale of an asset such as property, collectible items, a business, or stocks. Most states tax capital gains similar to how their standard income taxes are structured. According to data from the Tax Foundation, Idaho’s uppermost capital gains tax rate is 7.4%.

Idaho levies a standard state-wide sales tax of 6%. This sales tax rate has been in effect since October 2006 and applies to the sale of general items and some services.

However, some cities and counties charge an additional sales tax for items sold in their area. Additionally, some items sold in Idaho are subject to a special kind of tax known as excise taxes. How do sales taxes work in Idaho? Like most other states that impose sales taxes, Idaho requires applicable vendors to charge sales tax on the items they sell, and when tax season comes around, the vendor is then responsible for remitting the taxes they’ve collected to the state’s tax collection agency.

What are excise taxes?

As we briefly mentioned, some items available for purchase are taxed at a higher rate than the state’s standard sales tax rate. Excise taxes are a type of indirect tax that is charged to the manufacturer or vendor of a product, rather than the consumer. However, consumers should beware that these extra costs don’t often slip by the wayside. Vendors will generally build in the cost of excise taxes into the final cost of the product in an effort to cover their overall tax liability.

One of the most common places we see excise taxes in action is with what’s known as “sin taxes.” Sin taxes are levied on certain items that the state government deems harmful to the health or safety of the community. Alcohol and tobacco sales and gambling costs are all places where we see sin taxes. These rates vary state to state. Let’s take a look at how Idaho handles excise taxes.

Alcohol excise tax in Idaho

As we mentioned, each state can control their own excise taxes, so, some choose to tax certain beverages higher than others or not at all. In Idaho, both beer and wine are taxed under excise taxes but liquor is not. This is because the state only sells liquor at state liquor stores, also known as ABC Stores. The revenue earned at these establishments cover the costs taxes would, so there’s no need to add on extra fees.

• Beer: $0.15 per gallon
• Wine: $0.45 per gallon
• Liquor: N/A

Tobacco excise tax in Idaho

In addition to alcohol, tobacco products are also often subject to sin taxes. Idaho separates these taxes into two categories: cigarette tax and tobacco tax.

In Idaho, cigarettes are taxed at $0.0285 per stick or $0.57 per pack of 20 cigarettes and tobacco products (with the exception of cigarettes) are taxed at 40% of the wholesale price.

Gas tax in Idaho

Tax on fuel is another example of excise tax. In Idaho, gas is taxed at a rate of $0.32 per gallon, which is built into the final cost to the consumer.

One of the most appealing parts about living in Idaho—in addition to the natural and quaint mountain towns—is the fact that the Gem State levies some of the lowest property taxes in the country. Property taxes in Idaho are determined by local city and county governments, so they may vary depending on where your property is located and the value of your home.

In Idaho, urban areas tend to have higher property tax rates than rural areas. The average statewide tax rate for urban properties is 1.1511A% while rural properties are taxed 0.994% on average. Custer County collects the lowest rate of property taxes, levying an average rate of 0.0556% while Bannock County levies the highest property taxes in the state, collecting an average of 1.892% of a property’s assessed value per year.

As of 2004, the state of Idaho expired its estate and inheritance taxes. In states that do charge inheritance taxes, like Iowa and Maryland, those that inherit money or assets as a result of the death of a loved one, will have to allocate the defined amount toward state inheritance taxes.

Let’s say you inherit money from an aunt that lived and passed away in Maryland. Because her money and assets are subject to Maryland tax code, you would have to pay taxes on the amount you’ve received.

If you’re looking to save money on your next tax bill, claiming qualifying tax credits may be your best bet. Tax credits are a type of tax initiative offered by both the federal government and state agencies, cutting taxpayer’s tax bills dollar for dollar.

To save on your Idaho tax bill, check to see if you qualify for any of the following tax credits:

• Grocery credit
• Educational contribution credit
• Live organ donation expenses
• Credit for taxes paid to another state
• Credit for contributions to youth rehabilitation

Still hoping to cut down your tax bill? Here’s where tax exemptions and deductions come in. Yes, they’re similar to tax credits, but the main difference between tax credits and deductions is that tax deductions reduce your taxable income, rather than your actual tax bill. This reduction can sway you into a lower tax bracket if it has substantial value.

There are two types of tax deductions: standard deduction and itemized deductions. The standard deduction is a set amount of money the state allows any taxpayer to deduct on their taxes, based on filing status and income. Itemized deductions are a set of deductions that may or may not apply to you. These deductions are generally tied to government initiatives such as clean energy or charitable contributions. In order to claim an itemized deduction, you must have the supporting documents to backup your claim, otherwise you might face serious consequences if the state conducts a tax audit.

Now that you know how tax deductions work, let’s dive into Idaho’s tax deductible options.

Standard deduction

Idaho Standard Deduction

• Single: $12,000
• Married Filing Jointly: $24,000

Itemized deductions

As a result of 2018 changes to Idaho tax code, most itemized deductions have been eliminated according to the Idaho State Tax Commission.

Now that you know how Idaho state taxes work, which tax bracket you fall in, and what other items you may be taxed on, you’re ready to calculate your Idaho tax refund. If you’ve already paid some of your taxes by getting some of your paycheck withheld by your employer or by paying estimated taxes, you may qualify for money back from the state.

If you’re eager to reacquaint yourself with your tax money, you can use our Idaho income tax calculator to estimate your tax refund.

When you’re finally ready to file your state taxes, use these tips to ensure you’re following best practices!

• If you’re self-employed, find out if your annual income requires you to make estimated tax payments throughout the year.
• Familiarize yourself with your state’s tax deductions and credits to determine whether you should take the standard deduction or itemize your deductions.
• Take measures to protect your identity when filing your taxes so that you don’t fall victim to an IRS tax scam.

If you find out that you owe money on your Idaho state taxes, there are a few ways you can make tax payments.

• ACH Debit
• ACH Credit
• Credit Card
• E-check
• By mail (check or money order)

Now that you’re familiar with your responsibilities as an Idaho taxpayer, it’s time to discuss the elephant in the room—federal taxes. Yes, in addition to your state tax liabilities, you’re also required to file a return for your federal taxes.

Luckily, federal taxes apply to all taxpayers in the U.S., regardless of your home state. For most taxpayers, this means that they’re a little more straightforward than breaking down each state’s individual tax code.

Need help navigating your federal taxes? Head over to our federal tax calculator to learn more.