Idaho Business Taxes at a Glance
Idaho has a flat individual income tax that the Legislature has reduced in recent years, a refundable grocery credit paid through the income tax return, and a sales tax with local add-ons mainly in resort cities. Agriculture, construction, and a fast-growing population shape most of the accounting work in the state. BOMCAS helps Idaho individuals and businesses manage their Idaho and federal filings.
Individual Income Tax
Idaho taxes income at one flat rate, starting from federal adjusted gross income with Idaho additions and subtractions. Idaho also requires most filers to pay a small Permanent Building Fund tax on their return, a fixed amount separate from income tax.
Every Idaho return is also where residents claim the grocery credit, a refundable credit intended to offset sales tax on food. Most residents qualify, and it is paid even if no income tax is owed, but some people, such as those who were not residents for the full year, receive only part of it. We prepare Idaho returns, claim the grocery credit, and plan estimated payments.
Residency: The 270-Day Test
Idaho treats you as a resident if your domicile is in Idaho. It also treats you as a resident, even if your domicile is elsewhere, if you keep a place of abode in Idaho and spend more than 270 days in the state during the year. This longer test is unusual among states. Part-year residents and people who split time between Idaho and another state need records showing where they lived and when.
Many new residents come from California, Washington, and Oregon. We help them prepare part-year returns in both states in the year of the move and keep records that support the change.
Corporate and Pass-Through Taxes
Corporations doing business in Idaho pay corporate income tax on apportioned income, with a minimum tax. Corporations also pay the Permanent Building Fund tax. Partnerships and S corporations file Idaho returns and may need to withhold or file composite returns for nonresident owners. Idaho also offers an elective pass-through entity tax with credits for owners.
We prepare corporate and entity returns, handle nonresident withholding, and evaluate the election each year.
Sales and Use Tax
Idaho's sales and use tax has a statewide rate. Unlike many states, most Idaho cities and counties do not add their own general sales tax. The main exceptions are resort cities and some auditorium districts that levy local option taxes on sales, lodging, liquor by the drink, or other items under their own rules. Lodging is also subject to the state travel and convention tax.
Businesses need a seller's permit and file monthly, quarterly, or annually. We help register, prepare returns, track local option taxes in places like Ketchum, Sun Valley, McCall, and Sandpoint, and review use tax on purchases.
Agriculture and the Production Exemption
Agriculture is a key part of Idaho's economy, including potatoes, dairy, cattle, and grain. Idaho's production exemption removes sales tax from many items used directly in agricultural production, but items used for other purposes, such as general building materials or vehicles licensed for road use, are generally taxable. Records of how equipment is used matter if the exemption is reviewed.
Farm and ranch clients also need:
- Livestock and crop inventory records
- Federal farm reporting, including income averaging
- Equipment depreciation schedules
- Water and land cost records for real property
Selling Idaho Property or a Business
Idaho allows a capital gains deduction for part of the gain on certain Idaho property, such as real property held for a minimum period, some livestock used for breeding or production, and timber. Gains on stocks and most other investments do not qualify. Ranch families, farmers, and owners selling Idaho real estate should confirm which assets qualify and keep records of how long they were held. We calculate the deduction and prepare the returns.
Construction and Real Estate
Idaho's population growth has kept construction busy. Contractors in Idaho generally pay sales or use tax on materials they install as real property improvements, rather than charging it to customers. That changes pricing and recordkeeping. We set up job costing that tracks materials and tax by project and prepare the returns.
Payroll and Workers' Compensation
Idaho employers withhold state income tax and report unemployment insurance to the Idaho Department of Labor. Workers' compensation is required for most employers and can be purchased from private insurers or the Idaho State Insurance Fund. Agricultural employers have specific rules for seasonal workers. We run payroll, file quarterly reports, and reconcile to the books.
Potatoes, Dairy, Builders, and Resort Towns
- Agriculture and food processing: production exemptions, inventory, and seasonal payroll
- Construction and trades: use tax on materials and job costing
- Technology and manufacturing: apportionment and equipment records
- Tourism and resort businesses: local option taxes, lodging tax, and seasonal staffing
Books That Separate Exempt Farm Purchases
Idaho bookkeeping should separate exempt agricultural purchases, track materials by construction project, and record lodging and sales in resort cities separately. We set up the chart of accounts and month-end close to give these figures.
Contact BOMCAS About Idaho
Farmers documenting production exemptions, contractors handling tax on materials, and new residents claiming the grocery credit for the first time can contact BOMCAS for a remote review. We plan to add Idaho city pages, each with its own services, under this section. Visit the BOMCAS home page or our United States services to learn more about the firm. This page is general information only.
Talk to BOMCAS About Your Idaho Taxes
Have a question about your Idaho filings, payroll or bookkeeping? Contact BOMCAS or use the contact form below, and we will get back to you as soon as possible. You can also browse all United States services.