Idaho Income Tax for Business Owners: 5.3% Flat Rate, Corporate Rate and the $20 Minimum Tax

Idaho taxes business income at one flat rate for individuals and one flat rate for corporations, and both are 5.3% for tax years from 2025. The rate is the easy part. What decides your bill is your entity type, because a default LLC and a C corporation are taxed very differently at the state level. This guide covers the Idaho income tax rate, the Idaho income tax brackets, the Idaho corporate tax rate, and the small flat charges that sit on top of them.

Disclaimer: This is informational content, not legal or tax advice. Your Idaho tax depends on your entity type, your federal elections and your personal situation. Before you file, talk to a certified public accountant (CPA) or a tax attorney, especially if you are an S corporation, have more than one owner, or sell into other states.

The Idaho income tax rate is a flat 5.3%

The Idaho income tax rate is a flat 5.3%. It was 5.695% in 2024. HB 40 lowered it to 5.3% for tax years from 2025. Idaho has no LLC-specific franchise or annual state tax, so the income tax, the state sales tax and a few flat charges make up most of what a business owes the state directly.

Idaho income tax brackets for individuals

The Idaho income tax brackets are simple: a zero bracket, then 5.3% on everything above it. The Idaho State Tax Commission's 2025 schedule sets the figures below.

Filing status	0% applies up to	5.3% applies from
Single	$4,811	$4,812
Married filing jointly	$9,622	$9,623

Head of household and surviving spouse filers use the joint figures. The statute sets the base zero-bracket amounts at $2,500 for single filers and $5,000 for joint filers (Idaho Code 63-3024). Those amounts are indexed each year, which is why the 2025 figures are higher than the statute. The 2026 figures are published after year end, so check tax.idaho.gov for the current schedule before you estimate payments.

Sole proprietors, partners, S corporation shareholders and LLC members all report their share of business income on their personal Idaho return. The business does not pay the individual rate. The owner pays it on that share, and the zero bracket applies to the owner's total Idaho taxable income.

Two items to check on the personal return:

• Food tax credit: $155 per person, formerly known as the grocery credit. Check tax.idaho.gov for eligibility rules before you assume it applies to you.
• HB 559: Signed February 10, 2026 and retroactive to January 1, 2025, it conforms Idaho to nearly all 2025 federal tax changes. Ask your preparer which federal changes flow through to your Idaho return.

Illustration, using the 2025 schedule: a single filer with $50,000 of Idaho taxable income owes 5.3% of the amount above $4,811. That is 5.3% of $45,189, or $2,395.02, before credits and before any other charge on the return.

Idaho corporate income tax and the corporate tax rate

A C corporation pays the Idaho corporate income tax at 5.3% of its Idaho taxable income for 2025 and later (Idaho Code 63-3025). The Idaho corporate tax rate matches the individual rate, but a corporation faces two flat charges that a sole proprietor or default LLC does not pay in the same way:

• The $20 minimum tax. It applies to C corporations. It also applies to S corporations that file an Idaho return (Idaho Code 63-3025A(3)). A default LLC or a sole proprietorship does not pay it.
• The $10 Permanent Building Fund tax. Under Idaho Code 63-3082 it applies to each C corporation and to each individual filer. For pass-through entities it is charged per owner for whom the entity pays tax, so confirm that count with your CPA or the Tax Commission.

Illustration: a C corporation with $50,000 of Idaho taxable income owes 5.3%, or $2,650, plus the separate $10 Permanent Building Fund tax. The $20 minimum tax is a floor, so it changes the result only when the 5.3% figure is below $20.

Idaho business income tax by entity type

Your entity choice decides which return you file and who pays the income tax. This table summarizes the rules described above.

Entity	Who pays Idaho income tax	Other Idaho charges
Sole proprietorship	The owner, on the personal return, at 5.3% above the zero bracket	$10 Permanent Building Fund tax per individual filer
Default LLC (pass-through)	The members, on their shares, on personal returns at 5.3%	$10 Permanent Building Fund tax if the LLC files a partnership or S corporation return
LLC filing as an S corporation	The shareholder-members, on personal returns at 5.3%	$10 Permanent Building Fund tax; $20 minimum tax when it files an Idaho S corporation return
LLC taxed as a C corporation	The LLC, at 5.3% of Idaho taxable income	$20 minimum tax and $10 Permanent Building Fund tax
C corporation	The corporation, at 5.3% of Idaho taxable income (Idaho Code 63-3025)	$20 minimum tax and $10 Permanent Building Fund tax

Confirm the entity row that matches your filing before you budget. Many owners assume an LLC pays 5.3% at the entity level. A default LLC does not. Its members do, on their personal returns.

Sales tax and lodging taxes are separate

Idaho's state sales tax is 6%. Idaho has no local sales tax outside voter-approved resort cities, so most businesses collect only the 6% state rate. If you sell taxable goods, you need a sales tax permit from the Tax Commission at tax.idaho.gov/ibr. Sales tax you collect from customers is remitted to the state, so keep it out of your income figures.

Short-term rentals have one change to know. Since July 1, 2026, under HB 583, no city or county may require a license, fee, permit or registration for a short-term rental. State and local lodging taxes still apply, and they are separate from the income tax covered here.

Registration, annual reports and local licenses

Forming your entity with the Idaho Secretary of State is a registration, not a license. File through SOSBiz at sosbiz.idaho.gov, and search existing names at sosbiz.idaho.gov/search/business. Idaho has no state general business license, and counties issue no general business license.

Cities are the variable. Some cities require a general business license or permit. Others license only specific activities. Ask your city clerk which applies to your business, and use the Business Wizard at business.idaho.gov to build a checklist for your activity. Contractors are a separate case: Idaho has no statewide general contractor license, and contractors register with the Idaho Contractors Board at DOPL.

Every LLC and corporation must file an annual report every year. The fee is $0. For an LLC, the report is due each year before the end of the month in which the Certificate of Organization became effective, beginning one year after formation (Idaho Code 30-21-213). Corporations follow the same timing from their Articles of Incorporation. A zero fee does not make the filing optional.

Common mistakes that cost owners money

• Assuming a default LLC pays 5.3% at the entity level. Its members pay on their personal returns.
• Forgetting the $10 Permanent Building Fund tax, which applies per individual filer and per corporation.
• Applying the individual zero bracket to a corporation. The zero bracket is an individual figure. A corporation pays 5.3% of its taxable income, plus the $20 minimum tax where it applies.
• Treating sales tax collected from customers as profit.
• Skipping the annual report because the fee is $0.

Next steps

1. Confirm your entity type and the federal return you file, since that determines which Idaho return you file.
2. Estimate your Idaho income tax using the zero bracket for your filing status, then add the $10 Permanent Building Fund tax and any $20 minimum tax that applies to your entity.
3. Check tax.idaho.gov for the 2026 schedule and for how HB 559 affects your return.
4. Apply for a sales tax permit at tax.idaho.gov/ibr if you sell taxable goods.
5. Ask your city clerk about any local license, and calendar your annual report.
6. Book a CPA before your first filing. The Idaho Small Business Development Center can help with business planning, but its help is not tax advice.

This article is informational only and is not legal or tax advice. Confirm current figures at tax.idaho.gov, and work with a qualified CPA or attorney before you file.