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 | Score |
|---|---|---|
| Overall | 11 | 5.60 |
| Corporate Taxes | 21 | 5.35 |
| Individual Income Taxes | 11 | 5.85 |
| Sales Taxes | 9 | 5.46 |
| Property Taxes | 3 | 6.36 |
| Unemployment Insurance Taxes | 35 | 4.61 |
Get facts about taxes in your state and around the U.S.
The State Tax Competitiveness Index enables policymakers, taxpayers, and business leaders to gauge how their states’ tax systems compare. While there are many ways to show how much state governments collect in taxes, the Index evaluates how well states structure their tax systems and provides a road map for improvement.
115 min read
States that tax GILTI increase filing complexity, drive up the cost of tax compliance, and introduce unnecessary economic uncertainty and legal risk. 21 states and DC continue to tax GILTI despite these challenges.
6 min read
Sports stadium subsidies are salient political gimmicks designed to appear as if politicians are providing tangible benefits to taxpayers. The empirical evidence shows repeatedly that stadium subsidies fail to generate new tax revenue and new jobs or attract new businesses.
6 min read