You don’t have to withhold Idaho income tax in any of the following situations:
- The employee isn’t a resident of Idaho and earns less than $1,000 in Idaho in a calendar year.
- You employ an agricultural laborer who earns less than $1,000 in a calendar year.
- The employee is exempt from federal withholding.
- The employee is an American Indian who is an enrolled member of a federally recognized tribe, earns the income on a reservation, and lives on a reservation.
- The employee gives you a Form ID W-4 stating he or she is exempt from withholding because he or she didn’t owe Idaho income taxes in the previous year and expects not to owe for the current year. Note: The exemption is only good for the current year. The employee must give you a new Form ID W-4 each year.
If you’re an interstate motor carrier or private motor carrier and your employee has regularly assigned duties in more than one state, you only need to withhold income tax for the employee’s state of residence.
In general, a motor carrier provides motor vehicle transportation for compensation to the public or under a contract. A private motor carrier transports property it owns or leases by motor vehicle, and it transports the property for sale, lease, rent, or to further a commercial enterprise. See United States Code, Title 49, sections 13102 and 14503 to determine if the employee qualifies.
If your employees have regularly assigned duties on aircraft in more than one state, you must withhold income tax for their state of residence and the state in which they earn more than 50 percent of their wages. The percent of wages earned in a state is based on scheduled flight time in the state compared to total scheduled flight time for the year. See United States Code, Title 49, section 40116(f) to determine if the employee qualifies.
If you’re an interstate rail carrier and your employees have regularly assigned duties in more than one state, you only need to withhold income tax for the employees’ state of residence. See United States Code, Title 49, section 11502 to determine if the employee qualifies.
Don’t withhold any state income tax if your employee is a master or seaman who works on a vessel engaged in foreign, intercoastal, interstate, or noncontiguous trade. See United States Code, Title 46, section 11108 to determine if the employee qualifies.
IRA, pension or other similar payments
You don’t have to withhold Idaho income tax if you’re a payer of retirement income. Voluntarily, you can apply for an Idaho withholding account and pay the Idaho income tax withholding as a convenience to your payees. If you choose voluntarily to withhold, you must file Form 1099-Rs showing Idaho withholding by the due date. If you don’t choose to withhold Idaho income tax, you might want to notify payees and recommend they consider making estimated payments.
The income from an IRA, pension or other similar retirement payments is subject to Idaho income tax.
Active-duty military wages
You don’t have to withhold income tax on:
- Military wages of a person stationed in Idaho if that person’s domicile isn’t Idaho.
- Military wages of a person stationed outside Idaho if that person’s domicile is Idaho and their full-time active duty outside Idaho is for 120 consecutive days or more.
Note: You must withhold Idaho income tax on wages that a military person not on active duty earns in Idaho.
For military spouse information, see the Military page.