Registering a business in Idaho
Depending on your business structure, you may be required to register and file with several state agencies in Idaho. The Idaho State Tax Commission provides a walk through for new businesses found here.
S-Corporation Income Tax
Idaho recognizes the federal S-election, and Idaho S corporations are not required to pay income tax to the state. However, individual S corporation shareholders will owe state tax on their share of the company’s income.
S corporations in Idaho instead must pay a minimum tax of $20. An additional tax of at least $10 is required if the S corporation owes federal tax on excess net passive income or net recognized built-in gains.
LLC/Partnership Income Tax
Not required to pay income tax to Idaho. Business income is passed to partners who pay Idaho income tax on their personal return.
Additionally, Idaho is unusual in that it requires LLCs to pay corporate income tax on nondistributed income, and an additional $10 if LLC owes federal tax on excess net passive income or net recognized built-in gains.
Pass-through entities may pay the tax for the nonresident individuals on the pass through entity return at the corporate tax rate of 7.4%.
Individual Income Tax
Idaho has a static conformity with the Internal Revenue Code as it existed on January 1, 2020.
The starting point for computing Idaho's personal income tax liability is the federal adjusted gross income and allows their own state defined additions and subtractions to arrive at Idaho's adjusted gross income.
You can use either your federal itemized deduction or standard deduction, whichever benefits you more. The standard deduction is equal to the federal standard deduction for 2020:
Single - $12,400
Married Filing Combined - $24,800
Married Filing Separate - $12,400
Head of Household - $18,650
Qualified Widow(er) - $24,800
Personal and dependent exemptions are not offered.
Idaho does conform to the Internal Revenue Code (IRC) section 199A, also known as the QBI deduction.
Individual income tax rates vary between 1.125% and 6.925% depending upon income and filing status. Income is taxed as follows.
CARES Act Guidance
Idaho decouples from all CARES Act provisions.
S corporation, partnership and individual income tax returns are due on April 15th. If the due date falls on a weekend or holiday, the due date becomes the following business day.
Idaho does not require individuals to make estimated tax payments. Corporations are required to make estimated payments if it’s required to make federal estimated tax payments and the estimated Idaho tax due is $500 or more.
Filing an Extension
Idaho allows an automatic six month extension of time to file. To avoid penalties, you must pay at least 80% of the current year's tax due or 100% of the total tax
reported last year.
The penalty for not filing a return in a timely manner is a 5%/month to a max of 25%. For Partnerships, there is a $10 per partner per month penalty, up to five months.
If your business was formed or is located in another state, but generates income in Idaho, it may be subject to Idaho taxes. The rules for taxation of multistate businesses, including what constitutes nexus with a state for the purpose of various taxes, are complicated. If you run such a business, you should consult with a tax professional.
Idaho Tax Commission:
Idaho Secretary of State: