Yes. Idaho generally taxes retirement income that's included in your federal taxable income. However, Idaho allows a limited Retirement Benefits Deduction for certain taxpayers who meet the state's eligibility requirements and receive qualified retirement benefits.
This article applies to non-military retirement income. Military retirement benefits follow separate Idaho rules and are addressed separately.
Who Qualifies for the Idaho Retirement Benefits Deduction?
To qualify, you must meet the requirements under Part 1 (Eligibility) and Part 2 (Qualified Retirement Benefits).
Part 1: Age, Disability, and Filing Status Requirements
The recipient of the retirement benefits must be:
- Age 65 or older, or
- Disabled and at least age 62.
Additional requirements include:
- Married taxpayers generally must file a joint Idaho return.
- Married Filing Separately taxpayers don't qualify for the deduction.
- An unremarried surviving spouse receiving qualifying survivor benefits may qualify if the age or disability requirements are met.
What Retirement Benefits Qualify?
The deduction is limited to certain retirement systems specifically identified by Idaho law.
Qualified retirement benefits include:
Federal Civil Service Retirement
- Civil Service Retirement System (CSRS)
- Foreign Service Retirement and Disability System (FSRDS)
- Certain CSRS and FSRDS offset programs
Idaho Firefighters' Retirement Benefits
- Retirement benefits paid from qualifying firefighter retirement funds administered through PERSI.
Idaho City Police Retirement Benefits
- Certain Idaho city police retirement funds
- Certain PERSI-administered police retirement plans that no longer admit new members
What Retirement Income Doesn't Qualify?
Most retirement income doesn't qualify for the Idaho Retirement Benefits Deduction, including:
- Traditional IRAs
- Roth IRA distributions (if taxable)
- 401(k) plans
- 403(b) plans
- SEP plans
- SIMPLE plans
- Most private employer pensions
- Annuities that aren't specifically listed as qualifying plans
Deduction Limits
For 2026, the maximum Retirement Benefits Deduction is:
| Filing Status | Maximum Deduction |
|---|---|
| Single | $49,824 |
| Married Filing Jointly | $74,736 |
These limits may be reduced by Social Security benefits, Railroad Retirement benefits, and other qualifying retirement income received during the year. The deduction can't exceed the amount of qualifying retirement benefits included in federal taxable income.
Important Clarification
The Idaho Retirement Benefits Deduction is:
- A subtraction from income
- Not a full exemption from tax
- Available only if all eligibility requirements are met
Military retirement benefits are subject to different Idaho rules and aren't covered by this article.
How to Enter the Retirement Benefits Deduction
Program Entry
- Select State from the left-side menu.
- Click the three dots (...) next to Idaho and select Edit.
- Select Deductions from Income.
- Choose Retirement Benefits Deduction.
- Enter the qualifying retirement income included in your federal return.
The Retirement Benefits Deduction interview is similar to the screen shown here:(Image: Idaho Retirement Benefits Deduction entry screen)
Before You File
Review the PDF copy of your Idaho return before e-filing to verify that any qualifying Retirement Benefits Deduction was included correctly on the return.