Tool | September 2014
State-by-State Guide to Taxes on Retirees
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 0.5% to 5%, depending on the area.
Income Tax Range
Low: 1.6% (on taxable income up to $2,858 for married joint filers and up to $1,429 for individual filers)
High: 7.4% (on taxable income of $21,436 or more for married joint filers and $10,718 or more for individual filers)
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 Social Security retirement benefits and Railroad Retirement benefits. The maximum amount for 2013 that could be deducted by married couples filing jointly (age 65 or older) was $45,594, and for singles (age 65 or older), $30,396.
Property is assessed at its full market value. A general property tax is imposed for local purposes. 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 $83,920 for 2014.
Median property tax on the state's median home value of $171,700 is $1,188, according to the Tax Foundation.
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 or widower, 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 lived there since before April 15, 2014. They must meet one of seven requirements, two of which are being 65 or older or being a widow or widower. They also must have an income of $42,144 or less. Despite the deferral, though, taxes and interest must eventually be repaid to the state.
There is no inheritance tax or estate tax.
Editor's Picks From Kiplinger
- 6 Tax Factors to Consider When Picking a Retirement Destination
- Retirees, Watch Out for the State Tax Bite
- SLIDE SHOW: 10 Most Tax-Friendly States for Retirees
- SLIDE SHOW: 10 Least Tax-Friendly States for Retirees
- SLIDE SHOW: 10 Things You Must Know About Social Security
- SLIDE SHOW: 10 Things You Must Know About Traditional IRAs
- SLIDE SHOW: 5 Costly Retirement Surprises
- SPECIAL REPORT: Maximize Your Social Security Benefits
- TOOL: Kiplinger's State-by-State Guide to Taxes
- TOOL: Find the Best, Latest Mortgage Rates in Any State