Taxes
The state of Idaho maintains principles of tax diversification and equity, yet it has the lowest overall tax burden of any neighboring states. The many services delivered by Idaho's state and local governments are funded by a tax structure designed to raise sufficient revenue to finance above-average public services, without unfairly impacting any single segment of the state. This structure depends mainly on three tax sources: income taxes, sales tax and property tax.
Idaho's tax structure has been called one of the most balanced and progressive tax systems in the nation, and it's per capita state and local taxes, and per capita property tax are among the lowest of all western states.
Per Capita State&Local Taxes
* Source: Idaho Department of Commerce 3/03.
Corporate Income Tax Rates
Personal Income Taxes
Unemployment Tax Rules
Property Tax
Sales/Use Tax
Workers' Compensation Information
Corporate Income Tax Rates In Idaho you may choose to operate your business as a C corporation, S corporation, partnership, limited liability company (LLC) or sole proprietorship. However, the type of entity you select for your business may determine whether you or your business will be required to pay income tax on the business income (See below). C corporations: Domestic corporations (corporations organized in Idaho) and foreign corporations (corporations organized in a different state) are subject to an Idaho income tax. The corporate income tax (also sometimes referred to as the Idaho franchise tax) rate is 7.6 percent. A minimum tax of $20 is imposed on all corporations in Idaho. In addition, each corporation required to file an Idaho income tax return must pay a $10 permanent building fund tax. Your corporation may elect to pay an alternative tax equal to 1 percent of gross sales volume if it meets all of the following qualifications: The corporation is required to file a return if its only activity in Idaho is sales. Your corporation doesn't own or rent real estate or tangible personal property in the state. The corporation's annual gross sales during the tax year in Idaho do not exceed $100,000. S corporations: Should you meet the federal tax law requirements to operate as an S corporation, the IRS will allow your business to "pass through" its income to the shareholders--your business will not pay any IRS corporate level income tax. However, you must claim your entire share of business income on your personal federal income tax return, even if you did not extract any income from the business. In Idaho, the law extends this favorable tax treatment to state corporate income tax liability, and S corporations will not be subject to the corporate income tax. Partnerships: If you operate a business as a partnership, your partnership will not be taxed on its net income. Instead, partners must include in their Idaho taxable adjusted gross income their distributive share of partnership income. Limited liability companies (LLCs): Idaho law recognizes businesses operating as limited liability companies (LLCs). Both domestic and foreign LLCs in Idaho are classified as either partnerships or corporations for Idaho tax purposes. In Idaho, LLCs follow federal rules on how they will be taxed. Accordingly, if your LLC is treated as a partnership for federal tax purposes, it will not be taxed on its net income. Instead, members must include in their Idaho taxable adjusted gross income their distributive share of LLC income. If a business is classified as an association, taxable as a corporation for federal income tax purposes, it will also be taxable as a corporation for Idaho tax purposes. Personal Income Taxes If you are a resident or nonresident of Idaho and receive taxable income individually from property owned or business transacted in the state, you are subject to tax on net income. Therefore, if you are operating your business as a sole proprietorship, S corporation, partnership, or limited liability company, you will be subject to a personal income tax on business income that passes through to you. Individual income taxes in Idaho closely follow the federal tax code. Rates vary from 1.6 percent to 7.8 percent, depending on income. A wide variety of credits, exemptions and standard or itemized deductions reduce the amount of Idaho income tax. The following rates are applicable to individuals, trusts, and estates for the 2002 tax year: The following 2002 rates are for those filing jointly, surviving spouses, and heads of household: Property Taxes Idaho property taxes vary according to the needs of local taxing districts. The statewide average is 1.5 percent of market value. Items exempt from property tax include inventories, livestock, property in transit, pollution control facilities, properly licensed motor vehicles, vessels, aircraft, and the first $50,000 of the value of a primary residence. Taxing districts may not increase their annual budget requests more than 3 percent plus any increase in market value resulting from new construction. The property tax revenue limitation does not include revenue from levies that are voter approved. Idaho is ranked third lowest for per capita property tax, among 11 western states.
For property tax information specific to Bannock County, click here.
The following information applies to Idaho unemployment rules and rates:
Who must have coverage: Any business that has at least one employee for some portion of a day in each of 20 different weeks in the current or preceding calendar year, or that has a payroll of at least $1,500 in any quarter in the current or preceding calendar year.
Rates: 1.671%
Taxable Wage Limit: $29,200
Employee Withholding: None
Administration of taxation:
Idaho Department of Labor
317 Main Street
Boise, Idaho 83735-0001
Phone: 208-334-6318
Or 800-448-2977
Sales and use tax is collected at a rate of 6 percent from most items purchased or consumed in Idaho. The state's Production Exemption exempts from the sales and use tax equipment that is used in manufacturing, processing, mining, farming, fabricating operations, and clean rooms (used to make semiconductors and semiconductor manufacturing equipment). Most services are exempt from sales and use tax. And, with the exception of a few resort communities, Idaho cities have no local option sales tax.
The following rules and information apply to sales and use tax in Idaho:
Reporting period:
-
Generally: Monthly, by 20th day of the month.
- Other: Quarterly if tax due is $500 or less.
Administration of taxation:
State Tax Commission
800 Park Boulevard,
Plaza IV, Box 36
Boise, ID 83712
Phone: 208-334-7600 or, 800-972-7660
Workers' CompensationIn Idaho, all companies are subject to the workers' compensation statute and all are required to carry workers' compensation insurance. With regard to employees, there are no exceptions. However, special rules do apply to partners, sole proprietors, and corporate officers.
Partners and sole proprietors and their families may choose to reject coverage under the compensation policy. Corporate officers owning 10 percent or more of the corporation's stock may also reject coverage, and a signed form is required to reject coverage in either case. In the event that a corporate officer doesn't take a salary, an estimated payroll with set minimum and maximum amounts is used to calculate the premium.
Idaho employers with workers' compensation insurance from the State Insurance Fund or from commercial carriers pay some of the lowest premiums in the country. In fact, over the last decade substantial surpluses in the workers' compensation plan have been returned to Idaho employers, either in the form of reduced premiums or actual dividends.
Workers' compensation resources:
Idaho State Insurance Fund
1215 W. State Street
P.O. Box 83720
Boise, ID 83720-0044
Phone: (208) 332-2100
Or, 1-800-334-2370
Claims Department Fax: (208) 334-3253
E-mail: administration@isif.state.id.us
http://www.state.id.us/isif/index.htm
Idaho Department of Insurance
700 West State Street
P.O. Box 83720
Boise, ID 83720-0043
Phone: (208) 334-4250
Fax: (208) 334-4398
http://www.doi.state.id.us/
Industrial Commission - Idaho Main Office
P.O. Box 83720
317 Main Street
Boise, ID 83720-0041
Phone: (208) 334-6000
Or, 800-950-2110
Fax: (208) 334-2321
http://www.state.id.us/iic/index.html