Does Idaho Tax Social Security and Retirement Income?

Social Security is fully subtracted

Idaho’s return starts from federal adjusted gross income, so the taxable part of a Social Security benefit arrives on the Idaho return and is then removed. Form 39R, Part B, line 7 deducts the portion of Social Security benefits that is taxable on the federal return, the figure on line 6b of Form 1040, with no income limit and no age test. Benefits paid by the Railroad Retirement Board and Canadian Social Security benefits (OAS, QPP and CPP) are deducted on the same line. (Idaho State Tax Commission, Individual Income Tax Forms and Instructions 2025: Forms 40, 43, 39R and 39NR (revised March 2, 2026))

Social Security matters on the Idaho return in one other place. Benefits received, measured by the gross amount in Box 5 of Form SSA-1099 and not by the taxable part, reduce the maximum retirement benefits deduction available to the few retirees whose pensions qualify for it. (Idaho State Tax Commission, Individual Income Tax Forms and Instructions 2025: Forms 40, 43, 39R and 39NR (revised March 2, 2026))

The federal government is a separate matter. Up to 85% of a benefit can be taxed on a federal return once other income passes fixed thresholds, wherever you live. Our taxable Social Security calculator shows how much of yours is counted.

Private pensions are fully taxed; a narrow deduction covers some public and military pensions

A private-employer pension is taxed in full at 5.3%. Idaho’s only pension relief is a deduction for certain retirement benefits, and the statute confines it to named public systems and says that taxpayers outside those categories may not deduct any retirement benefits under it. (Idaho Code 63-3022A, Deduction of certain retirement benefits)

The qualifying pensions, for a recipient who is at least 65, or at least 62 and classified as disabled, are federal annuities under the Civil Service Retirement System (CSRS) and the Foreign Service Retirement and Disability System, benefits from the Idaho Firefighters’ Retirement Fund, and benefits from certain closed Idaho city police retirement funds. A civil service employee must have established eligibility before 1984. Federal Employees Retirement System (FERS) annuities do not qualify, and neither do benefits paid from the PERSI Base Plan. Married people must file jointly to claim the deduction. (Idaho State Tax Commission, Individual Income Tax Forms and Instructions 2025: Forms 40, 43, 39R and 39NR (revised March 2, 2026))

Military retired pay qualifies on wider terms: the retiree must be disabled, or 62 or older by the end of the year, or under 62 and employed during the year with enough income from that work to be required to file a federal return. An unremarried widow or widower of a service member can claim it on the same terms. (Idaho Code 63-3022A, Deduction of certain retirement benefits)

The deduction has a ceiling tied to the maximum Social Security benefit and recalculated each year. For 2025 it is $48,216 for a single filer and $72,324 for a joint return; the 2026 amounts had not been published on the review date. Social Security and Railroad Retirement benefits received by either spouse are subtracted from the ceiling, and the deduction cannot exceed the qualifying benefits included in federal income. A couple with a $60,000 CSRS annuity and $30,000 of Social Security would deduct $42,324 on the 2025 figures and pay tax on the other $17,676. (Idaho State Tax Commission, Individual Income Tax Forms and Instructions 2025: Forms 40, 43, 39R and 39NR (revised March 2, 2026))

IRA and 401(k) withdrawals are taxed as ordinary income at 5.3%

Traditional IRA and 401(k) withdrawals are part of federal adjusted gross income, which is line 7 of Idaho Form 40, and none of the subtractions on Form 39R removes them. They are not among the retirement benefits the deduction covers, so they are taxed at 5.3% once income passes the standard deduction and the bracket threshold. Qualified Roth withdrawals are not in federal adjusted gross income and never reach the Idaho return. (Idaho State Tax Commission, Individual Income Tax Forms and Instructions 2025: Forms 40, 43, 39R and 39NR (revised March 2, 2026))

A Roth conversion is taxed the same way. It raises federal adjusted gross income and Idaho has no subtraction for it, so a $50,000 conversion costs $2,650 of Idaho tax. Because Form 40 takes the federal senior deduction at whatever amount the federal return allowed, a conversion that reduces that deduction federally raises Idaho taxable income a little further. (Idaho State Tax Commission, Individual Income Tax Forms and Instructions 2025: Forms 40, 43, 39R and 39NR (revised March 2, 2026))

To size a conversion against federal brackets and Medicare surcharges, see the Roth conversion calculator; for required withdrawals, the RMD calculator.

Interest, dividends and securities gains are taxed at 5.3%; some Idaho property gains are 60% deductible

Interest, dividends and capital gains are taxed at the flat rate, with no lower rate for long-term gains or qualified dividends. Interest on U.S. government obligations included in federal adjusted gross income is deducted, though interest from Fannie Mae and Ginnie Mae securities is taxed. Interest and dividends from municipal bonds of other states and their local governments, which the federal return leaves out, must be added back; interest on Idaho municipal securities is not. (Idaho State Tax Commission, Individual Income Tax Forms and Instructions 2025: Forms 40, 43, 39R and 39NR (revised March 2, 2026))

Idaho allows a deduction of up to 60% of the capital gain net income from qualifying property located in Idaho: real property held for at least 12 months, tangible personal property used in a revenue-producing enterprise, certain livestock, and timber held 24 months. Gains on stocks, bonds and other intangible property do not qualify, nor does real property outside Idaho, so the long-term gains in our example households are taxed in full. The deduction is computed on Form CG. (Idaho State Tax Commission: Capital Gains (Idaho capital gains deduction))

Idaho taxes individuals at 5.3% of taxable income above a threshold. The statute sets the threshold at $2,500, or $5,000 on a joint return, and directs the Tax Commission to adjust it each year by the change in the consumer price index since 1998. Heads of household and surviving spouses use the joint threshold. No bill changing the rate was enacted in the 2026 session. (Idaho Code 63-3024, Individuals’ tax and tax on estates and trusts)

The Tax Commission’s rate schedule shows the indexed threshold for 2025: no tax on the first $4,811 of taxable income for a single filer or $9,622 for a married couple, and 5.3% above that. The schedule did not yet show 2026 on the review date, so the bracket table and the examples on this page use the 2025 threshold. Because the threshold is indexed to inflation, the 2026 figure will differ slightly. (Idaho State Tax Commission: Individual Income Tax Rate Schedule)

Idaho has no standard deduction of its own design. The Form 40 worksheet uses the federal amounts, including the additions for filers who are 65 or older or blind; for 2025 that is $15,750 single and $31,500 joint. Filers who itemize must remove state and local income or sales taxes from their federal itemized deductions. (Idaho State Tax Commission, Individual Income Tax Forms and Instructions 2025: Forms 40, 43, 39R and 39NR (revised March 2, 2026))

The federal amounts for 2026 are $16,100 for a single filer and $32,200 for a joint return, plus $2,050 for an unmarried person 65 or older or $1,650 for each married spouse 65 or older. The examples on this page use them: $18,150 for the single retiree and $35,500 for each couple. Idaho’s own 2026 forms had not been released on the review date. (Internal Revenue Service, Revenue Procedure 2025-32 (2026 standard deduction and additional amounts))

Idaho allows the federal deduction for seniors on 2025 returns. The Tax Commission announced on March 3, 2026 that the updated 2025 Form 40 instructions show how to claim the enhanced senior deduction, together with the federal deductions for tips, overtime and car loan interest, on line 18, which takes the total of lines 13a and 13b of the federal Form 1040. (Idaho State Tax Commission, news release, March 3, 2026: File now to get your conformity deductions)

That treatment rests on the conformity statute, which defines the Internal Revenue Code for Idaho purposes as the Code in effect on January 1, 2026, with exceptions that do not concern individual retirees. The Code on that date provides the senior deduction for tax years 2025 through 2028, and the 2026 conformity bill set aside only bonus depreciation and certain research costs, so this page applies it to 2026. That is an inference from the conformity date and not Tax Commission guidance for 2026: the Commission’s instructions and news releases so far address 2025 returns only, and its 2026 return forms had not been released on the review date. (Idaho Code 63-3004, Internal Revenue Code (conformity date))

The federal senior deduction is $6,000 for each person 65 or older, reduced by 6% of modified adjusted gross income above $75,000, or $150,000 on a joint return. In our examples the single retiree deducts $6,000 and the first couple $12,000, worth $318 and $636 of Idaho tax; the couple with $279,500 of income receive none. (26 U.S.C. 151(d)(5)(C), Deduction for seniors)

The food tax credit is applied after the tax is computed. It is $155 for the taxpayer, the spouse and each dependent for tax year 2025 and each year after, and it is refundable: if the tax due is less than the credit, the balance is paid as a refund. The example calculations subtract $155 for the single retiree and $310 for each couple. (Idaho Code 63-3024A, Food tax credits and refunds)

Idaho has no age-based exemption or credit of its own. Age is recognized through the federal amounts on Form 40: the additional standard deduction at 65 and the senior deduction. With the bracket threshold, on the figures used on this page, a couple who are both 65 or older with income under $150,000 can have about $57,100 of income other than Social Security before any Idaho tax is computed. (Idaho State Tax Commission, Individual Income Tax Forms and Instructions 2025: Forms 40, 43, 39R and 39NR (revised March 2, 2026))

Health and long-term care premiums: Form 39R lets a filer deduct health insurance premiums that have not already been deducted or excluded from income, including Medicare Part B and Part D premiums for those who enrolled voluntarily, and premiums for qualified long-term care insurance. A filer who uses the Idaho standard deduction does not have to reduce these by amounts claimed as federal itemized deductions. (Idaho State Tax Commission, Individual Income Tax Forms and Instructions 2025: Forms 40, 43, 39R and 39NR (revised March 2, 2026))

Food tax credit: $155 per person, or the actual sales tax paid on food up to $250 per person for those who submit receipts. Residents who are not required to file an income tax return can still claim the refund, using Form 24. (Idaho State Tax Commission: Idaho Food Tax Credit)

The same three households appear on every state page, so the figures can be compared across states. Each is a full-year resident taking the standard deduction, with no dependents. The figures are state income tax only: any county, city or school district income tax is described on this page but not added in. Pension income is from a private employer, and IRA figures are taxable withdrawals from traditional accounts. The state tax is our calculation from Idaho's published 2026 rules; it is an illustration, not a return.

These households also owe federal income tax, which is the same wherever they live. The tax bracket calculator and the guide to taxes in retirement cover that side.

Property tax in Idaho is levied locally. Tax Foundation figures drawn from Census data put Idaho property taxes at 0.50% of owner-occupied home value in 2024, 45th among the states. (Tax Foundation, Property Taxes by State and County, 2026 (comparative figures from Census ACS data))

The homeowner’s exemption applies at any age and income. It exempts 50% of the value of an owner-occupied primary residence and up to one acre of land, to a maximum of $125,000, the figure that has applied since 2021. On a $600,000 home the exemption is therefore $125,000, not $300,000. The owner applies once with the county assessor. (Idaho State Tax Commission: Homeowner’s Exemption)

The Property Tax Reduction program, also known as the circuit breaker, is the main age-based relief and is income-tested. For reductions on 2027 bills, total 2026 income after deducting medical expenses must be $40,030 or less. Income for this purpose includes Social Security, pensions, IRA distributions, interest, dividends and capital gains, so the income-tax exemption for Social Security does not carry over. (Idaho State Tax Commission: Property Tax Reduction (2027 program guide and income brackets))

The program also has a home-value limit. If the assessed value of the home exceeds the greater of $400,000 or 200% of the median assessed value of homes receiving the homestead exemption in the county, the applicant is referred to the deferral program instead. The statutory income limit is the greater of $37,000 or 185% of the federal poverty guideline for a household of two. (Idaho Code 63-705, Property tax reduction: income limitations and home value limit)

Idaho’s sales tax rate is 6%, and it applies to every retail sale of goods unless an exemption applies. The use tax is also 6%: a buyer owes it on goods bought online or in another state when at least 6% sales tax was not paid. (Idaho State Tax Commission: Sales and Use Tax online guide)

Groceries are taxed at the full rate. Idaho’s relief is on the income tax return instead: the food tax credit of $155 per person exists to offset the sales tax paid on food through the year, and a filer who keeps receipts can claim the actual tax paid on food, up to $250 per person. (Idaho State Tax Commission: Idaho Food Tax Credit)

Some resort cities have a voter-approved local option tax on top of the state rate; a city can apply it to everything subject to the state tax, though some limit it to lodging, alcohol by the drink and restaurant food. (Idaho State Tax Commission: City (local option) sales taxes)

Prescription drugs are exempt when bought under a practitioner’s prescription, and so are insulin, hearing aids, eyeglasses and contact lenses, dental prostheses, and durable medical equipment such as oxygen equipment and hospital beds. (Idaho Code 63-3622N, Sales tax exemption for prescriptions)

For comparison with other states, the Tax Foundation puts Idaho’s average local rate at 0.03% and its average combined state and local rate at 6.03% as of January 1, 2026, ranking 37th. (Tax Foundation, State and Local Sales Tax Rates, 2026 (comparative figures))

Idaho has no inheritance tax and no gift tax, and its estate tax expired in 2004. Nothing is owed to the state on an estate of any size for deaths on or after January 1, 2005; only the federal estate tax can apply, along with the tax of any other state where the estate holds real property. (Idaho State Tax Commission: Estates and Taxes)

The federal estate tax applies in every state. The estate tax calculator estimates both the federal tax and any state tax.

House Bill 40 of 2025 cut the flat rate on individuals and corporations from 5.695% to 5.3%. The same bill widened the deduction for military pensions to disabled veterans under 62, all veterans aged 62 to 64, and veterans under 62 who are employed and earn enough to owe federal income tax, and it removed gains and losses on precious metal bullion from the Idaho tax calculation. (Idaho Legislature, House Bill 40 (2025), Statement of Purpose and Fiscal Note)

House Bill 231 of 2025 raised the food tax credit and created the alternative of claiming the actual sales tax paid on food. It was made retroactive to January 1, 2025. The credit has been at its present level since then. (Idaho Legislature, House Bill 231 (2025): food tax credits and refunds)

House Bill 559, the annual conformity bill, was signed on February 10, 2026 as Session Law Chapter 1 and made retroactive to January 1, 2025. It moved the conformity date in Idaho Code 63-3004 from January 1, 2025 to January 1, 2026, which brought in the federal changes enacted in 2025, and it kept Idaho apart from federal bonus depreciation. Its statement of purpose describes it as the annual tax conformity bill and speaks of changes that affect the 2025 tax year, so the conformity date is revisited each session. (Idaho Legislature, House Bill 559 (2026): Internal Revenue Code conformity (bill status, text and statement of purpose))

A 2026 proposal to give seniors more did not become law. House Bill 605 would have added a $50 food tax credit for seniors on top of the $155, among other changes; it was introduced on February 6, 2026, printed, and filed in the office of the Chief Clerk, and went no further. The credit remains $155 at every age. (Idaho Legislature, House Bill 605 (2026): bill status and statement of purpose)

An Idaho resident is anyone domiciled in the state for the entire tax year, or anyone who maintains a place of abode in Idaho for the entire year and spends more than 270 days of it in the state. A person who leaves stops being treated as a resident once absent for at least 445 days in the first 15 months, provided that afterwards they are not in Idaho for more than 60 days in a calendar year and do not claim Idaho as their federal tax home. (Idaho Code 63-3013, Resident)

Residents are taxed on their total income, including income earned in another state or country. A part-year resident pays tax on all income received while living in Idaho plus Idaho-source income from the rest of the year, and a pension is included for the months of Idaho residence. Nonresidents pay tax only on income from Idaho sources. (Idaho State Tax Commission: Income Tax for Seniors and Retirees)

Federal law (4 U.S.C. 114) bars a state from taxing the retirement income of someone who is not its resident or domiciliary. A PERSI pension or a 401(k) built during an Idaho career is taxed only by the state where the retiree lives when it is paid, and a pension earned elsewhere becomes Idaho income once the retiree is an Idaho resident. (4 U.S.C. 114, Limitation on State income taxation of certain pension income)