Idaho Basic Business Taxes 2011
Idaho's economic development, finance, and tax organizations provide a range of incentive programs to initiate new business and commercial investment. Specific programs include the Idaho Business Advantage tax credit and investment tax credit.
Area Development Research Desk (March 2011)
Corporate income tax:
All corporations that transact or are authorized to transact business in Idaho or have income attributable to Idaho are subject to the corporate income tax. A 7.6 percent tax is imposed on net taxable income allocated and apportioned to the state. Net operating losses may be carried back two years (limited to $100,000 per tax year) and forward 20 years until absorbed.
Sales and use tax:
Sales and use tax is collected at a rate of 6 percent for most items purchased or consumed in the state. Idaho's Production Exemption exempts equipment used in manufacturing, processing, mining, farming, fabricating operations, and clean rooms (used to make semiconductors and semiconductor manufacturing equipment), any equipment or material used in research and development activities; and processing materials, substances or commodities for use as fuel for the production of energy are exempt from the sales and use tax. Most services are exempt from the sales and use tax. In addition, businesses are exempt from paying sales tax on pollution control equipment and utility and industrial fuels. With the exception of a few resort communities, Idaho cities have no local option sales tax.
Property tax varies according to the needs of Idaho's local taxing districts with a statewide average property tax levy of 1.222 percent of market value. Items exempt from property tax include inventories, livestock, property in transit, pollution control facilities, properly licensed motor vehicles, vessels, aircraft, and the first $50,000 of the value of a primary residence. Taxing districts may not increase their annual budget requests more than three percent plus any increase in market value resulting from new construction. The property tax revenue limitation does not include revenue from levies that are voter approved.
New employer unemployment insurance tax:
For 2010, 1.566 percent ($33,300 base)
Idaho Business Advantage tax credit:
Businesses that invest a minimum of $500,000 in new facilities and create at least 10 new jobs qualify for a variety of incentives including an enhanced tax credit of 3.75 percent or 62.5 percent of tax liability in any one year up to $750,000, a new jobs tax credit starting at $1,500 and climbing to $3,000, a 2.5 percent real property improvement tax credit, and a 25 percent rebate on sales tax paid on construction materials for the new facilities.
Investment tax credit:
A provision adopted by the Idaho legislature allows a three percent credit for new investments made in the state, not to exceed 50 percent of the tax liability for the year. The credit may be carried forward up to 14 years.
Qualified Investment Exemption:
This exemption may be applied in lieu of this income tax credit. A two-year exemption from property tax on the qualified personal property is available. The exemption is available only if a loss was incurred in the second preceding tax year in which the property is placed in service. The loss must have been computed without regard to any carry over or carry back of net operating losses.
• 5 percent research and development credit:
• 5 percent of basic research costs;
• 5 percent of excess qualified research costs;
• Defined by IRS, Section 41;
• Research must be performed in Idaho;
• Credit is transferable.
100 percent research and development tax exemptions:
Businesses can claim a 100 percent sales and use tax exemption for any property used in research and development activities.
Broadband telecom credit:
• Three percent transferable state income tax credit;
• Qualified investments in broadband equipment throughout Idaho;
• Up to $750,000.
New jobs credit:
• Businesses that produce, assemble, fabricate, manufacture, or process natural resource products will be allowed a $500 credit against Idaho income tax for each additional employee hired starting January 1, 2000.
• Businesses may earn a $1,000 tax credit for each additional employee added. Employee must work a minimum of 20 hours per week, make at least $15.50 an hour and must receive employer provided coverage under an accident or health plan. Can be carried over three years.
Net operating losses credit:
Net operating losses may be carried back two years, with a limit of $100,000 loss per tax year. If the loss is not absorbed in the two-year carry-back period, it may be carried forward until absorbed, not to exceed 20 years. The taxpayer may choose instead to carry a loss forward only and can carry it forward until absorbed, but not to exceed 20 years.
Property Tax Exemption:
Businesses that invest in new manufacturing facilities may receive partial or full property tax exemptions from local county commissioners. To qualify, businesses must invest a minimum of $3 million.
Large Business Property Tax Cap:
Businesses that invest a minimum of $1 billion in capital improvements will receive a property tax exemption on all property in excess of $400 million in value per year.