Listed below are the types of income that can be subtracted from your Idaho return:
Active Duty Military Pay: Idaho does not tax active duty military wages for services performed outside of Idaho.
Child And Dependent Care: If you claimed the Child Care Credit on your federal return, you’re allowed a deduction on your Idaho return for the expenses you paid for the child care for your dependents.
Retirement Benefits Deduction: To claim this deduction, the recipient(s) must be at least age 65 or be classified as disabled and be at least 62. If you are married and file separately, you cannot claim this deduction. The benefits must come from the Civil Services Employees, Idaho Firefighters, Police Officers of an Idaho City, or Service Members.
Health Insurance Premiums (not included on federal Sch A)
Idaho College Savings Program (up to $6,000; $12,000 for MFJ)
Interest earned on US Government Obligations: Deduct any amount of government interest that was included in your federal adjusted gross income.
Energy Efficiency Upgrades: Energy efficiency upgrades include: Insulation that is added to, not replacing, existing insulation. Insulated siding doesn’t qualify unless the cost of the siding and the insulating material is separately stated, in which case the cost of the insulating material alone qualifies. Windows that replace less efficient existing windows. Storm windows. Weather stripping and caulking. Duct sealing and insulation. Duct sealing requires mechanical fastening of joints and mastic sealant. The amount charged for labor to install the energy efficiency upgrades is also deductible. Storm doors no longer qualify for this deduction.
Technological Equipment Deduction: Qualifying items for this deduction are computers, computer software, and scientific equipment or apparatus manufactured within five years from the original date of donation. This deduction can't reduce Idaho taxable income to less than zero. Any unused deduction cannot be carried forward. In order to qualify, the donation must have been made to a public or nonprofit elementary/secondary school/college/university or to a public library or library district.
Adoption Expenses: You may deduct up to $10,000 of legal and medical expenses incurred per adoption.
Medical Savings Account Information (up to $10,000; $20,000 for MFJ)
Home For Aged Or Disabled Relative ($1,000 per family member)
Idaho Lottery Winnings (Less Than $600 Per Prize, Only If ID Winnings Were Included In Federal AGI)
Workers Compensation Insurance: If not deducted elsewhere, a Self-Employed person can deduct the actual costs of amounts that were paid for workers' compensation insurance coverage.
Long Term Care Insurance Premiums: Idaho allows you to deduct the amount you paid for long-term care insurance that you have not deducted elsewhere.
Income Earned on Reservation by American Indians Who Lived on the Reservation: Idaho allows this deduction if you live and work on the reservation, your a member of the tribe, and the income is included on your Form 40, line 7.
Alternative Energy Devices (20% but not more than $5,000)
Capital Gains Deduction: Up to 60% of the net capital gains reported on the federal return from the sale of qualified Idaho property may be deducted on the return.
Bonus Depreciation: If your property was acquired during 2008 and 2009, do not enter any amounts here. If the property was acquired before 2008 or after 2009, Include your share of bonus depreciation from form ID K-1, Part IV, Column B line 27.
First-time Home Buyer Savings Account: You can contribute up to $15,000 ($30,000 if married filing a joint return) to a first-time home buyer savings account and deduct the contribution.
Deposits into a first-time home buyer savings account can’t exceed $100,000 for the lifetime of the account. A first-time home buyer savings account is established in Idaho with a bank, savings and loan association, credit union, or trust company authorized to act as a fiduciary. The account is established to pay the eligible home costs of the account holder or to reimburse the account holder’s eligible home costs in connection with a qualified home purchase.
Include interest earned on the account but only if included on Form 40, line 7 (you will need to view the PDF copy of your state return). Interest earned on the account is tax deferred if the funds are used for a qualified home purchase. Enter the name of the financial institution and your account number in the spaces provided.
Check the box to attest that you’re a first-time home buyer. A first-time home buyer means an individual who:
• Resides in Idaho
• Has filed an Idaho income tax return for the most recent tax year
• Doesn’t own, either individually or jointly, a single-family or multi-family residence; and
• Has never owned or purchased, either individually or jointly, a single-family residence in any location
For more information on Idaho subtractions from income, please review instructions here.