Idaho has a fairly high state income tax for a Western state. This sets Idaho apart from other Western retirement destinations, including Wyoming, Nevada (which have no income tax), and Colorado (which has a low state income tax).
Idaho Income Taxes
All Idaho residents are subject to a Graduated Individual Income Tax. A graduated income tax rate is based on a taxpayer's income level. In Idaho the tax rate is based on taxable income rather than gross or actual income. Taxable income is determined by subtracting tax deductions, credits, and exemptions from an individual's actual income.
The Idaho Tax Rate Schedule lists the tax rates for a married couple filing jointly as: 1.6% for the first $2,632 in taxable income, 3.6% for $2,632-$5,264 of taxable income, 4.1% for $5,264-$7,896 in taxable income, 5.1% for $7,896-$10,528 in taxable income, 6.1% for $10,528-$13,160 in taxable income, 7.1% for $13,160-$19,740, 7.4% for $19,740-$52,640 and 7.8% for any amount of taxable income over $52,640. This tax is adjusted for inflation every year so the tax rates could change from year to year.
Idaho makes quite a few Tax Credits available to residents, including a Grocery Tax Credit. This refunds sales taxes paid on groceries in Idaho. Persons over 65 years will have to file a Form 20 Grocery Credit Refund with their state income tax return to get this refund. At least 12 months of Idaho residency is required to be eligible for this credit.
Idaho Sales Tax
All retail purchases in Idaho are subject to the 6% state sales tax. This includes all purchases of food, including unprepared food from grocery stores. Full time residents of the state can get a $70 Grocery Tax Credit on their state income tax. Part time residents are not eligible for the Grocery Tax Credit. Prescription drugs are not covered by Idaho's sales tax.
The sales tax in Idaho can be over 6% because some cities and counties in the state have a local option sales tax. You will have to contact local governments directly to learn the amount of this tax.
Idaho charges a 6% sales tax or Use Tax on items ordered online or through catalogs and shipped into the state. This tax has to be paid separately or with your state income tax return.
Idaho charges some additional sales taxes. These include a 15 cent per gallon beer tax, a 45 cent per gallon wine tax, a 57 cent per pack cigarette tax, and a 40% tax on all other tobacco products. These taxes are charged on top of the federal liquor and tobacco taxes. A full listing of all sales taxes in Idahois available from the State Tax Commission.
Idaho Property Taxes
The average property tax rate in incorporated cities and towns in Idaho is 1.275%. The average property tax rate in unincorporated areas is slightly lower at 0.832%. These rates are estimates because each town, city, and county can set its own property tax rates in Idaho.
There is a homeowner's exemption that exempts 50% of the first $92,040 in value from property taxes in Idaho. To get this exemption, a person must be living in the home before April 15 and file an application with the county assessor's office.
Persons over 65 can also qualify for a property tax reduction benefit. The amount of this benefit is unclear but individuals who own homes can apply for it through the county assessor's office.
|Cost of Living Rank:||#12|
|Income Tax:||1.6% - 7.8%|