Question 1

What is Idaho's state income tax rate for 2025?

Accepted Answer

Idaho has a flat income tax rate of 5.3% on taxable income above an inflation-indexed exemption threshold (approximately $4,811 for single filers and $9,622 for married-filing-jointly in tax year 2025). HB 40, signed by Governor Little in 2025, reduced the rate from 5.695% (TY2024) to 5.3% effective January 1, 2025, continuing Idaho's multi-year rate-reduction schedule.

Question 2

When did Idaho move from progressive brackets to a flat tax?

Accepted Answer

Idaho collapsed its progressive multi-bracket structure into a single flat rate effective January 1, 2023, via HB 1 of the September 2022 special session, which set the initial flat rate at 5.8%. Subsequent legislation (HB 172 in 2024 and HB 40 in 2025) has reduced the flat rate to 5.3% for tax year 2025, with further reductions possible if state general-fund revenue triggers are met.

Question 3

Does Idaho tax retirement income?

Accepted Answer

Idaho fully exempts Social Security benefits from state income tax. Idaho also provides a Retirement Benefits Deduction for U.S. military retirement pay, U.S. Civil Service retirement (for those hired before October 1, 1984), Idaho public-employee pensions, and Idaho firefighter/police pensions - up to $46,932 (single) or $70,398 (MFJ) for taxpayers age 65 or older, or age 62 if disabled. Private-sector pensions, 401(k) distributions, and IRA withdrawals are fully taxable at the Idaho flat rate.

Question 4

What is Idaho's standard deduction for 2025?

Accepted Answer

Idaho conforms to the federal standard deduction under IRS Rev. Proc. 2024-40, which for tax year 2025 is $15,000 for single/MFS, $30,000 for MFJ/QW, and $22,500 for head-of-household filers. Idaho does not offer a separate state standard deduction; taxpayers who take the standard deduction federally use the same amount on their Idaho Form 40 return.

Question 5

Does Idaho conform to the federal Internal Revenue Code?

Accepted Answer

Yes. Idaho is a rolling-conformity state, automatically adopting most federal Internal Revenue Code changes as they take effect, subject to specific state-level decouplings. This includes federal changes to standard deduction amounts, retirement account contribution limits, and depreciation schedules. Idaho does decouple from federal bonus depreciation under Section 168(k), requiring add-backs and separate state depreciation computations.

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