Idaho | #11 Overall
Idaho‘s tax system ranks 11th overall on the 2025 State Tax Competitiveness Index. Idaho’s individual and corporate income taxes are imposed at a single rate, which was reduced from 5.8 percent to 5.695 percent in 2024. However, the state’s throwback rule is inefficient and taxes “nowhere income” in the state from which sales are made because the seller lacks sufficient nexus to be taxed in the destination state, leading to taxation in the wrong state at the wrong rate—making the corporate income tax more of a disincentive to in-state activity. Idaho also fails to conform to federal provisions to provide first-year expensing of business machinery and equipment purchases. Idaho is also among the minority of states that tax global intangible low-taxed income (GILTI), with a 15 percent inclusion.
Idaho has a generous de minimis exemption for tangible personal property, eliminating compliance costs for many smaller and mid-sized businesses. The state’s income tax has a 30-day withholding threshold but a single-day filing threshold, meaning that an individual who works even one day in the state is expected to file and remit taxes, even though the income would not be withheld by their employer.
| Category | Rank | Rank Change | Score |
|---|---|---|---|
| Overall | 11 | 1 | 5.60 |
| Corporate Taxes | 21 | 1 | 5.35 |
| Individual Income Taxes | 11 | 0 | 5.85 |
| Sales Taxes | 9 | -2 | 5.46 |
| Property Taxes | 3 | 0 | 6.36 |
| Unemployment Insurance Taxes | 35 | -2 | 4.61 |
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