Idaho Tax Guide 2025

Idaho state flag for Idaho state tax guide.

Navigating the complexities of state taxes can be daunting, but understanding Idaho's tax landscape is essential for residents and newcomers alike.

In this guide, we'll explore key components of The Gem State's tax system, from income and sales taxes to property taxes and retirement benefits.

Idaho state tax: Overview

When it comes to sales tax, Idaho keeps things relatively low compared to the rest of the country. The state recently switched to a flat income tax rate and doesn't tax Social Security.

But Idaho is one of the few states that still taxes groceries.

Still, alcohol and tobacco taxes are lower than what you’ll find in many other states, and property taxes in the Gem State are also well below the national average.

In the news: Idaho parents with children enrolled in a private or homeschool may be eligible for a new refundable tax credit.

For more information, see Idaho Tax Credit Subsidizing Private School is Law: What You Need to Know.

[Data for this state tax guide was gathered from several sources including the U.S. Census Bureau, the state’s government website, the Sales Tax Handbook, and the Tax Foundation. Property taxes are cited as a rate percentage rather than the assessed value.]

Idaho income tax

Idaho has a flat income tax rate of 5.8%, according to the Tax Foundation.

Idaho retirement taxes

Idaho taxes most types of retirement income and has a flat tax rate. However, there are no estate or inheritance taxes in Idaho.

Social Security: Not taxable
Pensions: Partially taxable (Some military and government pensions might qualify for an exemption)
401(k) and IRA Distributions: Taxable

Idaho tax on retirement benefits: Social Security benefits and Railroad Retirement benefits are not taxed by the state.

If age 65 or older (62 or older if you have a disability), you may be able to deduct all or part of distributions from the following retirement plans.

Military Retirement
Civil Service Retirement (eligibility is dependent on account number)
Idaho Firemen's Retirement Fund
Policemen's Retirement Fund of Idaho City

Idaho sales tax

Idaho's state sales tax rate is 6%. Localities (typically resort communities) can add as much as 3%, but the average combined rate is just 6.03%, according to the Tax Foundation.

Groceries: Taxable
Clothing: Taxable
Prescription drugs: Exempt

How much are property taxes in Idaho?

In Idaho, the average effective property tax rate is 0.47%.

Source: Tax Foundation

Idaho Property Tax Breaks for Retirees

Property Tax Reduction: For 2025, some Idaho residents may qualify for a property tax reduction of up to $1,500. To qualify, homeowners must meet the following criteria.

Be 65 or older (see below for exceptions)
Had a income at a certain threshold or less after deducting medical expenses
You must have lived at the property before April 15, 2025
The property must be your primary residence
You must have a current homestead exemption

Some individuals under age 65 may qualify for the property tax reduction. These include people who are blind, widowed, or have a disability. Additionally, you may qualify if you were ever a POW or hostage. Children under 18 without a mother or without a father may also qualify.