Idaho State Tax Commission

Tax Update for Fall 2021

Here's the Fall 2021 issue of Tax Update — our newsletter for the business community. This edition features articles about new tax laws, tax videos, updated withholding tables, and new social media channels.

Tax rebates are coming

We're sending tax rebates to people who were full-year residents of Idaho for 2019 and 2020 and filed income tax returns for those years. This includes those who filed grocery credit refund returns. Visit our Tax Rebate FAQs webpage to learn more.

New tax laws — What you need to know

The 2021 Idaho Legislature passed tax laws about one-time federal money given to businesses, using credit card statements as evidence of an expense, the burden of proof for sales tax exemptions, and more. Below are some highlights. For more details about the legislation, visit the Legislature's website.

Income tax

Idaho conforms to the Internal Revenue Code for 2021

Idaho conforms to the Internal Revenue Code (IRC) as of January 1, 2021, except for removing excess losses of noncorporate taxpayers under IRC 461(l).

House Bill 058 – Effective January 1, 2021

Preserving limited losses

Idaho taxpayers can keep the benefit of losses that exceed the limit and carry them forward as a net operating loss up to 20 years.

House Bill 170 – Retroactive to January 1, 2018

Bank or credit card statements allowed as evidence

Taxpayers can use a statement or invoice from a credit card company or other financial institution such as a bank as evidence that they made an expenditure. They still need documentation to support the business purpose for the expense.

House Bill 217 – Effective January 1, 2021

Some federal money for businesses is nontaxable in Idaho

One-time federal money provided to Idaho businesses in 2020 is nontaxable for Idaho income tax except for emergency rental assistance program funds.

Nontaxable money includes:

  • Rebound Idaho small-business grants
  • Forgiven Paycheck Protection Program loans
  • Economic Injury Disaster Loan advance funds

House Bill 251 – Effective January 1, 2021

Bonus depreciation addback limited to benefit

Idaho taxable income only includes the bonus depreciation add-back to the extent the depreciation could be used on the federal return. Passive loss and other basis carryovers will have to be adjusted accordingly.

House Bill 276 – Effective January 1, 2021

State and local tax workaround allowed

A pass-through entity can elect to pay Idaho tax at the entity level as a workaround for the $10,000 limit on the federal deduction for state and local taxes. The annual election and related tax payment must be made by April 15 of the following year.

House Bill 317 – Effective January 1, 2021

Lower tax rates, tax rebate

Idaho's income tax rates have been reduced. The corporate income tax rate is now 6.5%. For individual income tax, rates now range from 1% to 6.5%, and the number of tax brackets dropped from seven to five. Also, some Idaho residents will receive a one-time tax rebate in 2021.

House Bill 380 – Effective January 1, 2021

Sales tax

New manufactured home sales clarified

When a maker of manufactured homes sells new manufactured homes to a retail dealer with a resale certificate, the homes aren't subject to sales tax.

House Bill 032 – Effective July 1, 2021

Buyers responsible to prove tax exemptions

Buyers rather than sellers now have the burden to establish a sales tax exemption when they give the seller an exemption or resale certificate. The buyer bears the primary responsibility and liability for any subsequent audit.

House Bill 171 – Effective July 1, 2021

Idaho will treat some organizations as nonresidents

Idaho will treat out-of-state corporations, partnerships, LLCs, and other organizations the same as nonresident individuals when determining whether they owe Idaho sales or use tax on vehicles and vessels.

These vehicles and vessels include:

  • Automobiles
  • Motorcycles
  • Trucks
  • Trailers
  • Snowmobiles
  • All-terrain vehicles
  • Specialty off-highway and utility-type vehicles
  • Vessels without motors 11 feet or more in length
  • Vessels with a motor regardless of length

House Bill 210 – Effective July 1, 2021

Property tax

Property Tax Deferral program updated

The following changes have been made to the Property Tax Deferral program:

  • The household income limit has increased to $50,000.
  • The interest rate has been adjusted to match the income tax interest rate.
  • The program now includes properties that are part of a trust or life estate.
  • The deadline to apply for the program is now the first Monday in September.

House Bills 309 and 389 – Effective January 1, 2021

Homeowner's exemption increased; property-tax relief program modified

The following changes have been made to property tax relief programs:

  • The homeowner's exemption has increased to $125,000.
  • The maximum benefit for the Property Tax Reduction program has increased to $1,500.
  • A home that qualifies for property tax reduction can't exceed 125% of the assessed median value for all homes in the county where it's located. (Enacted January 1, 2021, but becomes effective January 1, 2022.)
  • The benefit for 100% service-connected disabled veterans has increased to $1,500.

House Bill 389 – Effective January 1, 2021 or January 1, 2022 as noted.

Personal property exemptions increased; transient personal property exempt

The personal property exemption will increase from $100,000 to a limit of $250,000 per taxpayer per county. Transient personal property — defined as transitory construction, mining, and logging equipment — will be fully exempt.

House Bill 389 – Effective: Retroactive to 01/01/2021 Sections 1-7 &12; 01/01/2022 Sections 8-11

Product Tax

Beer definitions revised

Beer with alcohol content greater than 4% is no longer defined and taxed as wine. Beer is now defined as any beer with 5% or less alcohol by volume (ABV). Strong beer is now defined as any beer over 5% up to 16% ABV. Also, the tax distribution formula has been revised and a fund has been established to distribute beer tax to the Idaho Hop Growers Commission.

House Bill 232 – Effective July 1, 2021

Check out the new withholding tables online

Employers and payroll providers: We've updated the income tax withholding tables for 2021. This includes the Idaho Child Tax Credit Allowance table. You don't need to adjust withholding back to the beginning of the year, but please use the revised tables going forward.

To learn more about income tax withholding requirements for employers, visit the Withholding section on the Tax Commission website.

Watch our videos

I missed my tax due date, now what? Is it too late? Find the answers when you watch our Tuesday Tax FAQs video. Subscribe to idahostatetax on YouTube to see the latest videos or check out our website to view recorded webinars.

Do you collect sales tax? Watch our video to find out how to amend your Form 850 sales tax return. Other videos are about such topics as what to do if your identity is stolen, small-business taxes, and sales and use taxes for contractors.

Use TAP to manage your taxes

Have you heard of Taxpayer Access Point or TAP for short? You can find it through our Tax Commission website, and it's among the best ways to manage many taxes online.

Read these TAP guides for more information:

Follow us on social media

We continue to expand our social media presence to help you get the tax information you need. You can find us on Facebook, Instagram, Twitter, YouTube and now LinkedIn.

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Published September 20, 2021

This information is for general guidance only. Tax laws are complex and change regularly. We can't cover every circumstance in our guides. This guidance may not apply to your situation. Please contact us with any questions. We work to provide current and accurate information. But some information could have technical inaccuracies or typographical errors. If there's a conflict between current tax law and this information, current tax law will govern.