IDAHO
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NICKNAME
The Gem State
BOTTOM LINE: TAX-FRIENDLY
Idaho taxes all income, except Social Security and Railroad Retirement benefits. Its top tax rate of 7.4% applies to taxable income of $20,700 and above. However, seniors get a generous retirement-benefits deduction. Property is assessed at full market value, but your primary residence is eligible for an exemption of up to 50% of assessed value. Idaho does not have an inheritance tax, estate tax or gift tax.
STATE SALES TAX
6% (prescription drugs are exempt). Some Idaho resort cities, counties and auditorium districts have a local option sales tax, in addition to the state sales tax, which can add from 0.5% to 5% depending on the area.
INCOME-TAX RANGE
Low: 1.6% (on taxable income up to $2,760 for married joint filers, $1,380 for individual filers)
High: 7.4% (on taxable income of $20,700 or more for married joint filers; on taxable income of $10,350 or more for individual filers)
SOCIAL SECURITY
Benefits are not taxed.
EXEMPTIONS FOR OTHER RETIREMENT INCOME
Idaho does not tax Railroad Retirement benefits. It offers a retirement-benefits deduction if you are age 65 or older and receive qualifying retirement benefits, such as a civil-service pension or military pension. The amount deducted must be reduced by retirement benefits paid under the Federal Social Security Act and the Federal Railroad Retirement Act. The maximum amount that may currently be deducted by married couples filing jointly (age 65 or older) is $41,814, and for singles (age 65 or older), $27,876.
PROPERTY TAXES
Property is assessed at its full market value. A general property tax is imposed for local purposes and is limited to 1% of market value. The state property tax is suspended as long as the sales and use tax are in effect. A homeowner's primary residence is eligible for an exemption of 50% of the assessed value of the home, up to a maximum of $83,974 for 2012.
Tax breaks for seniors: If you are a qualified Idaho homeowner, you may be eligible for property tax relief. To qualify, you must own and occupy the home as your primary residence, meet income requirements and be either age 65 or older, a widow(er), blind, a former prisoner of war, a fatherless or motherless minor, or a qualifying disabled person. This program may reduce property taxes on your home and up to one acre of land by as much as $1,320.
Idaho also has a property-tax deferral program that allows eligible applicants to temporarily defer property taxes on their home and up to one acre of land. Residents must live in a primary-residence home or mobile home and have been living there since before April 15, 2012. They must meet one of seven requirements, two of which include being 65 or older or being a widow or widower. They also must have an income of $40,000 or less. Despite the deferral, though, taxes and interest must eventually be repaid to the state.
INHERITANCE AND ESTATE TAXES
Idaho does not have an inheritance tax, gift tax or estate tax.
Visit RetirementLiving.com for a complete rundown of taxes in Idaho.
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