What Income Can I Subtract on My Idaho Return?

Idaho allows several income subtractions and deductions that can reduce your Idaho taxable income. These adjustments are claimed on your Idaho return and may help lower the amount of state tax you owe.

Below are some of the most common Idaho income subtractions available for the 2026 tax year.

Active Duty Military Pay

Idaho doesn't tax active duty military wages earned for services performed outside Idaho. If you qualify, you can subtract those wages from your Idaho income.

Child and Dependent Care Expenses

If you claimed the federal Child and Dependent Care Credit, Idaho may allow a deduction for qualifying child care expenses paid for your dependents. The Idaho deduction is calculated differently than the federal credit.

Retirement Benefits Deduction

You may qualify for the Idaho Retirement Benefits Deduction if:

• You're age 65 or older, or disabled and at least age 62.
• You're not married filing separately.
• The benefits come from a qualifying retirement system such as:
  • Civil Service Retirement System (CSRS)
  • Certain Idaho firefighter retirement plans
  • Certain Idaho police retirement plans
  • Qualified retired service member benefits

Additional eligibility requirements apply.

Health Insurance Premiums

You may deduct health insurance premiums you paid for yourself, your spouse, and your dependents if they weren't already deducted elsewhere or included as a federal Schedule A deduction. Certain restrictions apply for employer-paid coverage, cafeteria plans, and self-employed deductions claimed federally.

Idaho College Savings Program (IDeal)

Contributions to Idaho's IDeal 529 College Savings Program may qualify for a deduction of up to:

• $6,000 for most filing statuses
• $12,000 for Married Filing Jointly

Contributions to out-of-state 529 plans don't qualify for the Idaho deduction.

Interest From U.S. Government Obligations

Idaho doesn't tax certain interest earned from U.S. government obligations. If that interest was included in your federal adjusted gross income, you may subtract it on your Idaho return. Interest from certain agencies, such as FNMA and GNMA, doesn't qualify. 

Energy Efficiency Upgrades

You may deduct qualifying energy-efficiency improvements made to your Idaho residence, including:

• Additional insulation added to existing insulation
• Replacement energy-efficient windows
• Storm windows
• Weather stripping and caulking
• Duct sealing and insulation

Installation labor costs may also qualify. Storm doors no longer qualify for this deduction. Your home must meet Idaho's eligibility requirements.

Technological Equipment Donation Deduction

You may be able to deduct the lesser of your cost or the fair market value of qualifying technological equipment donated to eligible Idaho schools, colleges, universities, libraries, or library districts.

Qualifying items include:

• Computers
• Computer software
• Scientific equipment manufactured within five years of the donation date

This deduction can't reduce Idaho taxable income below zero, and unused amounts can't be carried forward. 

Adoption Expenses

Idaho allows a deduction of up to $10,000 per adoption for qualifying legal and medical adoption expenses. Travel expenses don't qualify.

Idaho Medical Savings Account Contributions

You may deduct contributions to an Idaho Medical Savings Account of up to:

• $10,000 if filing single
• $20,000 if married filing jointly

Qualified interest earned on the account may also qualify for subtraction.

Home for an Aged or Disabled Family Member

You may qualify for a $1,000 deduction per qualifying family member if you maintain a household and provide more than half of that person's support. Limits and eligibility requirements apply. 

Idaho Lottery Winnings

You can subtract Idaho lottery winnings of less than $600 per prize if those winnings were included in your federal adjusted gross income. Winnings from other states don't qualify. 

Workers' Compensation Insurance Premiums

Self-employed taxpayers may deduct workers' compensation insurance premiums paid for Idaho coverage if the premiums weren't deducted elsewhere on the return. 

Long-Term Care Insurance Premiums

Idaho allows a deduction for qualified long-term care insurance premiums that haven't already been deducted or excluded elsewhere on the return.

Income Earned on an Indian Reservation

You may qualify to subtract income earned on a reservation if all of the following apply:

• You're an enrolled member of a federally recognized tribe.
• You live on the reservation.
• You work on the reservation.
• The income was included in your Idaho return.

Alternative Energy Device Deduction

If you install a qualifying alternative energy device in your Idaho residence, you may be able to deduct:

• 40% of qualified costs in the year the device is placed in service (up to $5,000), and
• 20% of qualified costs in each of the next three years (up to $5,000 annually)

Qualifying devices include certain solar, wind, geothermal, natural gas, propane, and EPA-certified wood or pellet stove systems.

Idaho Capital Gains Deduction

You may deduct up to 60% of qualifying capital gains reported on your federal return from the sale of eligible Idaho property, including certain real property, business property, livestock, timber, and qualifying partnership interests. Stocks, goodwill, and other intangible assets don't qualify.

Bonus Depreciation Adjustment

If you claimed federal bonus depreciation for qualifying property acquired before 2008 or after 2009, Idaho may allow a subtraction adjustment. Special rules apply, and additional calculations may be required. Property acquired during 2008 and 2009 generally isn't eligible for this adjustment.

First-Time Home Buyer Savings Account

Idaho allows a deduction for contributions to a qualified First-Time Home Buyer Savings Account of up to:

• $15,000 for most filers
• $30,000 for Married Filing Jointly

Additional rules include:

• Lifetime account deposits are limited to $100,000.
• The account must be established with a qualified Idaho financial institution.
• Interest earned on the account may be deductible if included in Idaho income.
• You must certify that you're a first-time home buyer.

To qualify as a first-time home buyer, you must:

• Reside in Idaho.
• Have filed an Idaho income tax return for the most recent tax year.
• Not currently own a residence, individually or jointly.
• Never have owned or purchased a single-family residence anywhere.