Idaho Tax Guide: Flat 5.695% Income Tax Rate

Tax Overview

Idaho transitioned to a flat income tax rate of 5.695% in 2023, replacing a progressive system that previously had rates up to 6%. This change simplified the state's tax code and reduced the tax burden for many residents. Idaho's flat rate positions it competitively among western states, though it remains higher than neighboring states like Wyoming (no income tax) and Utah (4.65% flat).

Sales tax in Idaho is 6% at the state level, with no local option sales taxes in most areas. Idaho taxes groceries at the full rate, which is a notable burden for families. However, the state provides a grocery tax credit of $120 per person ($140 for seniors 65+) to offset this cost. This credit is available to all Idaho residents regardless of income.

Property taxes in Idaho have been a growing concern as rapid population growth and rising home values have pushed tax bills higher. The effective rate is around 0.63%, but actual bills vary significantly by county. Idaho offers a homeowner exemption that removes a portion of the home's value from taxation, and a circuit breaker program provides additional property tax relief for qualifying seniors and disabled residents.