Bottom Line
Middle-Class Families: Tax-Friendly (Go to the Kiplinger Tax Map for Middle-Class Families)
Retirees: Most Tax-Friendly (Go to the Kiplinger Tax Map for Retirees)
At first blush, the Gem State might not look like a tax-friendly state. Idaho's current top income tax rate of 6% kicks in at a fairly low amount, making the tax hit feel more like that of a coastal state.
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But, if you dig a little deeper, you'll see some good news on taxes. Starting in 2023, a new, lower flat income tax rate applies. And sales taxes aren't too bad, either. Plus, since groceries are taxable, the state offers a tax credit of $100 per person to offset the sales tax on them ($120 if you're over 65). The state's median property tax rate is well below average, too. And to top things off, Idaho doesn't have an estate tax or inheritance tax.
Idaho Income Taxes
Idaho Income Tax Range
Low: 1% (on taxable income up to $3,324 for married joint filers and up to $1,662 for individual filers)
High: 6% (on taxable income of $16,622 or more for married joint filers and $8,311 or more for individual filers)
Beginning in 2023, a flat rate of 5.8% on taxable income over $2,500 ($5,000 for joint filers) will apply. The threshold will be adjusted annually for inflation after 2023.
Idaho Taxation of Social Security Benefits
Social Security benefits are not taxed by the state.
Idaho Tax Breaks for Other Retirement Income
For the 2022 tax year, taxpayers age 65 and older can exclude up to $40,140 of income from qualified retirement plans. Joint filers can exclude up to $60,210. The deduction is reduced by Social Security and Railroad Retirement benefits, which are also exempt from tax. Eligible plans include federal government, Idaho police and firefighter, and military retirement plans.
In addition, the grocery credit is increased by $20 (to $120) for Idaho residents age 65 or older (increased to $140 beginning in 2023).
Idaho Sales Tax
6% state levy. Localities (typically resort communities) can add as much as 3%, but the average combined rate is just 6.02%, according to the Tax Foundation.
- Groceries: Taxable
- Clothing: Taxable
- Motor Vehicles: Taxable
- Prescription Drugs: Exempt
Idaho Real Property Taxes
In Idaho, the median property tax rate is $492 per $100,000 of assessed home value.
Idaho Property Tax Breaks for Retirees
For 2023, homeowners age 65 or older with income of $33,870 or less are eligible for a property tax reduction of up to $1,500.
In addition, residents 65 or older with income of $53,638 or less in 2022 can defer 2023 property tax payments.
Idaho Motor Fuel Taxes
Gasoline: 33¢ per gallon.
Diesel: 33¢ per gallon.
Idaho Sin Taxes
Cigarettes: $0.57 per pack
Other tobacco products: taxed at 40% of wholesale sales price
Beer: $0.15 per gallon if 5% or less alcohol by volume; $0.45 per gallon if over 5% alcohol by volume
Wine: $0.45 per gallon
Liquor: $10.91 per gallon (the liquor tax is an estimate by the Distilled Spirits Council of the United States and published by the Tax Foundation)
Idaho Estate and Inheritance Taxes
No estate or inheritance tax.
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