Idaho state income tax
Idaho has a state income tax. It is flat, with a top marginal rate of 5.3%. Flat 5.3% tax on Idaho taxable income above a $0 zero-bracket amount ($2,500 of taxable income before the rate applies, per statute); reduced from 5.695% (2024) to 5.3% effective January 1, 2025 (H.B. 40, 2025). No other brackets exist above the flat rate. Capital gains are taxed under special rules (see below).
Does Idaho have a state income tax?
Yes. Idaho taxes individual income on a flat schedule topping out at 5.3%. Flat 5.3% tax on Idaho taxable income above a $0 zero-bracket amount ($2,500 of taxable income before the rate applies, per statute); reduced from 5.695% (2024) to 5.3% effective January 1, 2025 (H.B. 40, 2025). No other brackets exist above the flat rate.
| Item | Idaho |
|---|---|
| State income tax | Yes, flat |
| Top marginal rate | 5.3% |
| Capital gains | Special rules, up to 5.3% |
| State sales tax | 6% (plus local) |
| Avg. property tax rate | 0.5% of home value |
| Estate / inheritance tax | None |
How does Idaho tax capital gains?
Idaho taxes capital gains under special rules rather than at the ordinary income rate. CORRECTED from 'ordinary': Idaho allows a deduction of up to 60% of net capital gain from the sale of QUALIFYING Idaho property, real property (land, held 12+ months), tangible personal property used in a revenue-producing enterprise (held 12+ months), timber (grown in Idaho, held 24+ months), and breeding livestock/cattle/horses (held 12-24 months). The remaining (non-excluded) portion is taxed at the ordinary 5.3% flat rate, so the effective rate on qualifying gains can be as low as ~2.1% (40% x 5.3%). Gains NOT from qualifying Idaho property (stocks, bonds, out-of-state real estate, most personal-use property) get no deduction and are taxed in full as ordinary income at 5.3%. Form CG is used to compute the deduction. You still owe federal capital gains tax on top of any state tax. See how capital gains tax works in 2026.
What about retirement income in Idaho?
Retirement income is taxed differently from wages in many states. For how Idaho treats Social Security, pensions, and 401(k)/IRA withdrawals, see Idaho retirement taxes.
Sources
- Idaho income tax rates and brackets: Idaho Department of Revenue / Taxation.
- Idaho capital gains treatment: Idaho tax authority.
- Idaho sales tax: Idaho Department of Revenue.