Idaho offers a vibrant environment for business, with about 189,000 small businesses employing 56% of the state’s workforce. Whether you’re an established business owner or planning to start a new venture, understanding the tax landscape in Idaho is crucial. This guide provides an overview of the various taxes small businesses in Idaho must navigate, including tax rates, filing requirements, and deadlines.
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Types of Business Taxes in Idaho
Idaho business owners may be subject to various taxes depending on their business structure, activities, and revenue. Here’s a breakdown of the main types of taxes:
- Business Income Tax
- Applicable Entities: C corporations, S corporations, and LLCs with C corp elections
- Tax Rate: 5.695%
- Filing Requirements: File Form 41 for C corporations or Form 41S for S corporations by the 15th day of the fourth month after the tax year ends.
- Estimated Payments: Required for C corporations if liability is at least $500. Payments are due quarterly by April 15, June 15, September 15, and December 15.
- Affected Business Entity (ABE) Tax
- Applicable Entities: Entities taxed as partnerships or S corporations
- Tax Rate: 5.695%
- Filing Requirements: File Form PTE-12 by the 15th day of the fourth month following the close of the tax year.
- Sales and Use Tax
- Withholding Tax
- Applicable Entities: Employers with employees
- Tax Rate: 5.695%
- Filing Requirements: File Form 910 annually, quarterly, monthly, or semi-monthly.
- Unemployment Insurance Tax
- Applicable Entities: Employers with employees
- Tax Rate: Varies based on business’s experience rating
- Wage Base: $53,500 per employee per year
- Filing Requirements: File quarterly reports (Form TX20/TX26) by April 30, July 31, October 31, and January 31.
- Personal Property Tax
- Applicable Entities: Businesses using personal property
- Tax Rate: Based on property type and value
- Filing Requirements: Report annually to the county assessor by March 15.
- Nonresident Withholding Tax
- Applicable Entities: Pass-through entities with nonresident members
- Tax Rate: 5.695% on distributive share income
- Filing Requirements: File Form PTE-01 by the 15th day of the fourth month following the close of the tax year.
How to File and Pay Idaho Business Taxes
Business taxes in Idaho can be filed and paid through various methods:
- Online Filing and Payment: Use the Taxpayer Access Point (TAP) for electronic submissions and payments.
- Mail: Send forms and payments to the address indicated (where applicable).
Important Deadlines
Keep track of these key dates to avoid penalties:
- Business Income Tax Returns: Due by the 15th day of the fourth month after the tax year ends.
- Estimated Tax Payments: Due quarterly by April 15, June 15, September 15, and December 15.
- Sales and Use Tax Returns: Monthly, quarterly, or annual filing based on sales volume.
- Withholding Tax Returns: Due annually, quarterly, monthly, or semi-monthly.
- Unemployment Insurance Reports: Due quarterly by April 30, July 31, October 31, and January 31.
Tax Credits and Incentives
Idaho offers several tax credits and incentives for small businesses, including:
- Idaho Tax Reimbursement Incentive: This is available to new and existing Idaho businesses in various industries (including aerospace, agriculture, food processing, and high-tech) that create a minimum number of full-time jobs. It is worth up to 30% on income, payroll, and sales taxes for up to 15 years.
- 3% Investment Tax Credit: This credit is available to all Idaho businesses. It is worth 3% of investments in new machinery and equipment used in the state, and it has a 14-year carryover or a two-year exemption from all personal property taxes.
- Idaho Business Advantage: This is available to businesses that invest at least $500,000 in new facilities and create at least 10 jobs paying at least $40,000 annually with benefits. Benefits include a 3.75% Enhanced Investment Tax Credit, 2.5% Real Property Improvement Tax Credit, and 25% Sales and Use Tax Exemption.
- Credit for Idaho Research Activities: This credit is available to eligible businesses that conduct qualified research in the state. It equals 5% of the excess of qualified research expenses over the base amount plus 5% of basic research payments.
For more information, read our article all about Idaho tax incentives for businesses.
Idaho’s business tax breakdown by business type
Business taxes can be complicated, so we’ve included a chart below that breaks down the taxes that different business structures usually pay.
Remember that pass-through entities don’t pay federal income taxes themselves—the obligation is passed on to their business owners or shareholders, who pay them through their personal income tax returns.
| Business type | Personal income tax | ABE tax | Corporate income tax | Sales and use tax | Withholding tax | Unemployment tax | Federal income taxes |
| C corporation | No | No | Yes | Yes, if applicable | Yes, if you hire employees | Yes, if you hire employees | Yes |
| S corporation | Yes (pass-through), if not making the ABE election | Yes, if it makes the election | Yes | Yes, if applicable | Yes, if you hire employees | Yes, if you hire employees | Yes (pass-through) |
| LLC | Yes (pass-through), if not making the ABE election | Depends on how it’s structured | Depends on how it’s structured | Yes, if applicable | Yes, if you hire employees | Yes, if you hire employees | Yes (pass-through) |
| Partnership | Yes (pass-through), if not making the ABE election | Yes, if it makes the election | No | Yes, if applicable | Yes, if you hire employees | Yes, if you hire employees | Yes (pass-through) |
| Sole proprietorship | Yes (pass-through) | No | No | Yes, if applicable | Yes, if you hire employees | Yes, if you hire employees | Yes, by way of individual income tax |
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Idaho Small Business Taxes: The Employer’s Complete 2023 Guide
If you’re looking for the perfect home for your new venture, you may want to consider Idaho.
In addition to taking the number one spot in AdvisorSmith’s 2021 ranking of entrepreneur-friendly states, the Gem State ranked 15th in the Tax Foundation’s list of most tax-friendly states this year.
So if you’re considering starting a small business in Idaho, here’s what you’ll need to know about the state’s business taxes:
What small business taxes do you pay in Idaho?
Your company’s tax obligations are dependent on factors like your annual revenue, business entity, and employer status. Overall, though, small businesses operating in Idaho can expect to pay income tax, sales tax, withholding tax, unemployment tax, and perhaps local or industry-related taxes.
Idaho personal income tax
Pass-through entities—including sole proprietorships, partnerships, and limited liability companies (LLCs)—pay income taxes through the owner’s or member’s personal tax returns.
Idaho’s individual income tax in 2023 is 5.8% of a taxpayer’s taxable income.
How to pay
File your personal tax return (Form 40 for residents, and Form 43 for part-year residents and nonresidents) by April 15.
You can file your return electronically or by mail. Use one of these payment methods to pay any applicable taxes. Note that, if you choose to e-file, you must use the same tax software you used to file your federal income tax return. Those who plan to submit their tax return by mail should send their tax forms to the address below:
Idaho State Tax Commission
PO Box 56
Boise, ID 83756-0056
To learn more about filing personal tax returns in Idaho, review this guide from the State Tax Commission (STC).
Partnerships and LLCs taxed as partnerships have additional tax filing requirements to which they must adhere. These companies are required to file an additional partnership tax return (Form 65) by the 15th day of the fourth month after the fiscal year ends. For partnerships following the calendar year, this deadline is April 15. File your return online or by mail. If you choose to pay your taxes electronically, use one of the payment options offered here.
For more information on filing a partnership return, visit the STC website.
Idaho corporate income tax
Idaho also taxes business income attributable to Idaho, as well as income from corporations that are registered or do business in the state. The corporate income tax rate in Idaho is 6%.
How to pay
Corporate tax returns and payments must be submitted to Idaho’s STC by the 15th day of the fourth month after the end of the fiscal year. For calendar filers, the due date is April 15.
File Form 41 (or Form 41S for S corporations) online through one of the authorized companies listed here or by mailing your tax return to the appropriate address here. If you prefer to pay your taxes electronically, the STC offers multiple payment options for you to choose from.
Corporations in their first year of business don’t have to make estimated tax payments to the STC. However, established businesses that are required to make federal estimated tax payments and have a state tax liability of $500 or more need to pay quarterly estimated taxes by April 15, June 15, September 15, and December 15.
If your business is required to make quarterly payments, you can pay your taxes online. Alternatively, you can mail Form 41ES along with your payment to the address below:
Idaho State Tax Commission
PO Box 83784
Boise, ID 83707-3784
Note that, unlike C corporations, S corporations don’t have to pay quarterly estimated taxes. For more information on Idaho’s business income tax, visit the STC website.
Sales and use tax
Businesses that sell physical products, digital products, and certain kinds of services must collect sales tax at the point of purchase and pay it to the STC. The state imposes a flat 6% sales and use tax on all taxable goods and services.
How to pay
Before you can collect sales tax from customers, you need to register for a seller’s permit with the state’s Department of Labor. You can do this online by following the instructions outlined here.
Once you receive your permit, you must file tax returns on a monthly, quarterly, semiannual, or annual basis. Your filing frequency is determined by your business’s tax liability. However, no matter your assigned filing frequency, your returns and tax payments are due by the 20th day of the month after your filing period ends. Keep in mind that the state of Idaho requires you to file your returns even if you don’t owe any taxes for the period.
File your sales and use taxes online through Idaho’s Taxpayer Access Point (TAP) system or by mailing Form 850 to the appropriate address. Note that printable tax forms aren’t available online because the STC sends out personalized versions to all registered businesses.
For more information about the state sales tax, visit the STC website.
Withholding tax
Idaho employers are required by law to withhold a percentage of each employee’s wages and submit them to the STC. Idaho’s withholding tax rate in 2023 is 5.8% of income over $2,500.
How to pay
To pay your withholding taxes, you’ll need to register your business with the STC here. After that, you’ll need to file your taxes on a monthly, semimonthly, quarterly, or annual basis, depending on the payment frequency the STC assigns to your business. The STC website describes how they assign each business’s filing frequency here. Similar to Idaho’s sales tax, you must file withholding taxes even if you have no wages to report.
File Form 910 online or by mail and use one of these payment methods to pay your withholding taxes each filing period. Keep in mind that if your tax liability for the filing period is $100,000 or more, the state of Idaho requires you to submit your payment electronically.
Additionally, Idaho employers must file two other withholding tax forms on an annual basis:
1. Form 967 must be filed by the last day of January if you had an active Idaho withholding account or withheld state income taxes during your fiscal year. You can submit this tax form online through TAP or by mail to the following address:
Idaho State Tax Commission
PO Box 76
Boise ID 83707-0076
Note that employers who meet the IRS W-2 electronic filing requirements and have 50 or more employees based in Idaho are required to file Form 967 electronically.
2. Form 96 is due by the last day of February. Mail the completed form to the address below:
Idaho State Tax Commission
PO Box 36
Boise, ID 83722-0410
Note that Forms 910 and 967 aren’t available online because the STC sends each employer personalized withholding tax forms after they register their business.
For more information on Idaho’s withholding tax, go to the STC website.
Idaho unemployment insurance tax
Idaho employers will also need to pay state unemployment insurance (UI) taxes to fund unemployment benefits for eligible workers who leave the company.
Unemployment tax rates in 2023 range from 0.207% to 5.4% on the first $49,900 of each employee’s wages. The standard rate for new employers is 1%.
How to pay
First, register your business with the state’s Department of Labor here. Each quarter, you’ll need to use Form TX20 and Form TX26 (both are available here once you create an account) to file and pay your UI tax obligations. Tax reports and payments are due by the last day of the month following the end of the calendar quarter. All employers must file through the Department of Labor website.
To learn more about Idaho’s unemployment tax, review the state’s employer handbook.
Other industry-related and local taxes
In addition to the business taxes imposed by the state of Idaho, each municipality can levy its own taxes on companies within its jurisdiction. For instance, you may be responsible for local property or sales taxes, depending on the location of your business.
Some companies may need to pay industry-related taxes as well, such as the:
- alcoholic beverages tax
- farming and ranching tax
- fiduciary tax
- fuels taxes
- operating property tax
- travel and convention tax
- vacation rentals and short-term lodging tax
Make sure you’re meeting all of your company’s state and local tax obligations by talking with your accountant or tax professional, or by reaching out to your local tax authorities.
Idaho tax breakdown by business type
Here’s a breakdown of the federal and Idaho state tax obligations for each business type. Remember that pass-through entities pay federal income taxes through the personal tax returns of their owners or members.
| Business type | State income taxes | Sales and use tax | Withholding tax | Unemployment tax | Federal income taxes |
| C corporation | Yes | Yes, if applicable | Yes, if you hire employees | Yes, if you hire employees | Yes |
| S corporation | Yes | Yes, if applicable | Yes, if you hire employees | Yes, if you hire employees | Yes (pass-through) |
| LLC with C corp election | Yes | Yes, if applicable | Yes, if you hire employees | Yes, if you hire employees | Yes |
| LLC | Yes | Yes, if applicable | Yes, if you hire employees | Yes, if you hire employees | Yes (pass-through) |
| Partnership | Yes | Yes, if applicable | Yes, if you hire employees | Yes, if you hire employees | Yes (pass-through) |
| Sole proprietorship | Yes | Yes, if applicable | Yes, if you hire employees | Yes, if you hire employees | Yes, by way of individual income tax |
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