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Idaho Retirement Tax Friendliness

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Overview of Idaho Retirement Tax Friendliness

Social Security retirement benefits are not taxed at the state level in Idaho. Additionally, the state’s property and sales taxes are relatively low. Other forms of retirement income, such as from a 401(k) or an IRA, are taxed at rates ranging from 1.125% to 6.925%, the state's normal income tax levels.

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You will pay of Idaho state taxes on your pre-tax income of
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Quick Guide to Retirement Income Taxes
is toward retirees.
Social Security income is taxed.
Withdrawals from retirement accounts are taxed.
Wages are taxed at normal rates, and your marginal state tax rate is %.
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    Jennifer Mansfield, CPA, JD/LLM-Tax, is a Certified Public Accountant with more than 30 years of experience providing tax advice. SmartAsset’s tax expert has a degree in Accounting and Business/Management from the University of Wyoming, as well as both a Masters in Tax Laws and a Juris Doctorate from Georgetown University Law Center. Jennifer has mostly worked in public accounting firms, including Ernst & Young and Deloitte. She is passionate about helping provide people and businesses with valuable accounting and tax advice to allow them to prosper financially. Jennifer lives in Arizona and was recently named to the Greater Tucson Leadership Program.

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Idaho Retirement Taxes

Photo credit: ©iStock.com/nicoolay

This mountainous western state has a lot to offer retirees, including breathtaking scenery, a low cost of living and some of the country’s best skiing. When it comes to retirement taxes, however, Idaho is a mixed bag.

The good news is that Idaho doesn’t tax Social Security income at the state level. Additionally, the state’s property and sales taxes are relatively low. The bad news is that other forms of retirement income are taxed at rates ranging from 1.125% to 6.925%. So, depending on your primary income source and level of income, Idaho may or may not be great for you.

A financial advisor in Idaho can help you plan for retirement and other financial goals. Financial advisors can also help with investing and financial plans, including taxes, homeownership, insurance and estate planning, to make sure you are preparing for the future.

Is Idaho tax-friendly for retirees?

Idaho is generally a tax-friendly state for retirees, but whether that’s true for you will depend on your specific circumstances. Seniors who intend to rely mostly on Social Security will find Idaho tax-friendly, as the state does not tax Social Security and has low property and sales taxes. On the other hand, seniors who will be receiving significant income from retirement savings accounts like an IRA may find Idaho’s tax system to be less agreeable.

Is Social Security taxable in Idaho?

Social Security income is entirely tax-exempt from the Idaho state income tax. In order to exempt your Social Security income, you will need to attach Form 39R to your Form 40.

Are other forms of retirement income taxable in Idaho?

Income from retirement savings accounts, including 401(k) accounts and IRAs, is fully taxable at rates ranging from 1.125% to 6.925%. Income from a private sector pension is also fully taxable, but income from public pensions may qualify for a deduction for taxpayers age 65 and older or anyone who's at least 62 and is disabled. However, that deduction is reduced by an amount equal to the amount of the taxpayer’s Social Security income.

Income Tax Brackets

Single Filers
Idaho Taxable IncomeRate
$0 - $1,5681.125%
$1,568 - $3,1363.125%
$3,136 - $4,7043.625%
$4,704 - $6,2724.625%
$6,272 - $7,8405.625%
$7,840 - $11,7606.625%
$11,760+6.925%
Married, Filing Jointly
Idaho Taxable IncomeRate
$0 - $3,1361.125%
$3,136 - $6,2723.125%
$6,272 - $9,4083.625%
$9,408 - $12,5444.625%
$12,544 - $15,6805.625%
$15,680 - $23,5206.625%
$23,520+6.925%
Married, Filing Separately
Idaho Taxable IncomeRate
$0 - $1,5681.125%
$1,568 - $3,1363.125%
$3,136 - $4,7043.625%
$4,704 - $6,2724.625%
$6,272 - $7,8405.625%
$7,840 - $11,7606.625%
$11,760+6.925%
Head of Household
Idaho Taxable IncomeRate
$0 - $3,1361.125%
$3,136 - $6,2723.125%
$6,272 - $9,4083.625%
$9,408 - $12,5444.625%
$12,544 - $15,6805.625%
$15,680 - $23,5206.625%
$23,520+6.925%

How high are property taxes in Idaho?

Property tax rates in Idaho are relatively low. The state’s average effective rate is 0.63%, well below the U.S. average. That means an Idaho homeowner can expect to pay about $630 in annual property taxes per $100,000 in home value.

What is the Idaho property tax reduction?

Also called the “circuit breaker,” the Idaho property tax reduction lowers the total property tax bill for Idaho homeowners who meet certain criteria. Seniors who are age 65 or older qualify for this deduction if they own and occupy their home and had 2020 income of less than $31,900. The circuit breaker reduces taxes by up to $1,320 on a home with no more than one acre of property.

Photo credit: ©iStock.com/renal

How high are sales taxes in Idaho?

Idaho has one of the lowest average total sales tax rates of any state. While the statewide sales tax rate is relatively high at 6%, only a handful of cities charge a local sales tax. Thus, you can expect to pay 6% in sales taxes unless you go to a handful of cities popular with tourists, including Stanley and Sun Valley.

What other Idaho taxes should I be concerned about?

There's really nothing else to worry about in Idaho. The Gem State has no estate or inheritance tax, so unless your estate qualifies for the federal estate tax (the exemption threshold is $11.7 million for 2021), you don’t need to worry about this.