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Business Incentives

“Kooskia is open for business”

Do you have a business, wanting to relocate?

Click here for State of Idaho business incentives.

Idaho has one of the lowest tax burdens of all western states, low utility costs and a productive workforce that add to bottom line profits for companies operating here. In addition to a business-friendly and accessible government, several provisions in Idaho law directly benefit Idaho firms.

Tax Credits

Investment Tax Credit

A provision adopted by the Idaho legislature allows a 3% credit for new investments made in the state, not to exceed 50% of the tax liability for the year. The credit may be carried forward up to 14 years.

Corporate Income Tax

Rate reduced from 8.0% to 7.6%

Research & Development Credit

5% of basic research costs
5% of excess qualified research costs
Defined by IRS, Section 41
Research must be performed in Idaho
Credit is transferable
Sunsets in 2005

Broadband Telecomm Credit

3% transferable state income tax credit
Qualified investments in broadband equipment throughout Idaho
Up to $750,000
Sunsets in 2005

Net Operating Losses

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 twenty years. The taxpayer may choose instead to carry a loss forward only and can carry it forward until absorbed, but not to exceed twenty years.

Tax Exemptions

Business Inventory

Business inventories are exempt from all taxation within the state.

Goods in Transit

The state's freeport law provides that goods in transit are exempt from taxation. an additional exemption from the sales and use tax is provided for goods purchased by a carrier and delivered outside the state under a bill of lading for use by the carrier in its business.

Pollution Control Equipment

Pollution control equipment required by state and federal regulation is exempt from the sales and use tax.

Pollution control facilities are exempt from property tax.

Industrial Machinery and Equipment

Registered motor vehicles, vessels and aircraft are exempt from property tax. In addition, the following equipment is exempt from the sales and use tax:

Personal Property used by broadcasters in producing or broadcasting television or radio programs
Motor vehicles and trailers delivered in-state for use out-of-state
Aircraft primarily engaged in the transport of passengers or freight for hire
Equipment used directly in manufacturing, processing, mining, fabricating or logging operations
Clean rooms used in semiconductor and semiconductor equipment manufacturing

Industrial Fuels and Raw Materials

The following materials are exempt from the sales and use tax:

Personal property directly used or consumed in manufacturing, processing, mining or producing fabricated property
Certain containers for packing
Delivered utilities including water, electricity and natural gas
Heating fuel
Property used in the production of certain advertising newspapers

Property Tax Exemptions

Fully exempt: inventories, livestock, stored property in transit, pollution control equipment, household belongings, clothing, licensed vehicles and RVs, and property of religious, fraternal or education groups

Partially Exempt: improvements on residential property, farms

Workforce Training

Workforce Development Training Fund

Idaho's Workforce Development Training Fund grants monies to businesses for worker training based on job creation. Firms are reimbursed for eligible expenses, up to $2,000 for each new job created.

Qualified jobs must:

Be in groups of five or more new employees
Be within a "basic industry" which imports new monies into the community
Be full time positions
Include employer assisted benefits
Pay a minimum of $6.00 per hour

Workforce Development Training Fund-Rural Component

The Rural Component expands the job training program to counties in rural Idaho experiencing high unemployment or low per capita income. A rural county is any county that does not have a city over 20,000 in population. High unemployment is defined at a 6.5% or higher annual rate. Low per capita personal income is defined as less than 80% of the state's per capita personal income level. The streamlined application process does not require matching funds and allows for

Up to $3,000 per employee
1 employee

State Business Finance Programs

Idaho Prime Loan Program

A State-sponsored program similar to the SBA LowDoc program.
	Commercial bank makes loan Up to $150,000 Up to 85% SBA guarantee
Loans made at Prime Rate
State of Idaho buys the loans
	Pools them, resells them

Industrial Revenue Bonds

A fixed-asset loan program where a company may "borrow" the tax-exempt status of a sponsoring city or county
	Applies to manufacturing, processing, production or assembly
Public corporation issues tax exempt bonds to finance project
	Business collateralizes bonds
Maximum $10 million (total)

State Business Infrastructure Programs

Community Development Block Grant

Grants to cities or counties for public infrastructure to support business development
	Projects must benefit low & moderate income households
Grants up to $500,000
	Maximum of $10,000 for each new job created

Rural Community Block Grant

Grants to rural communities to finance and facilitate business development
	Public owned land, buildings, infrastructure
Grants up to $500,000
	State funds, fewer restrictions and less administrative overhead

Local Business Infrastructure Programs

Tax Increment Financing

A method for cities or counties to fund new infrastructure which may benefit businesses making new investment
An Urban Renewal District is formed
	City or county
Property in district assessed
	Before new investment
	After new investment
Tax exempt bonds sold to pay for infrastructure in district
	Taxes collected from new investment pledged to retire the bonds
	Schools held harmless

Other Tax Information

Individual Income Tax

Individual Income Taxes in Idaho closely follow the federal tax code. The starting point of the Idaho income tax is federal adjusted gross income. The individual income tax rate is graduated on taxable income below $42,258 for married taxpayers and below $21,129 for single taxpayers. Rates vary from 1.6 percent to 7.8 percent, depending on income. A wide variety of credits, personal exemptions and standard or itemized deductions reduce the amount of Idaho tax.

Sales and Use Tax

Sales and Use Tax is collected at a rate of six 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) from the sales and use tax. With the exception of a few resort communities, Idaho cities have no local option sales tax.

Property Tax

Property Tax varies according to the needs of Idaho's local taxing districts with a statewide average of 1.5 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.