How Idaho’s Taxes Compare To Other States In The Region

Mar 11, 2015

The Tax Foundation released its annual state tax comparison Tuesday. The non-partisan research group says Idahoans pay a little more than $3,000 a year per capita in state and local taxes. That means 9.5 percent of all Idaho personal income goes to local and state taxes. This puts Idaho right in the middle when you rank all the states, but the Gem State looks a little different if you compare it to its neighbors.

In the chart above you can see that Idaho has the second highest “tax burden” in the region. That means that after Oregonians, Idahoans are paying more of their income in taxes.  But look at the chart below and you’ll see that Idahoans have a lower total dollar tax burden than any neighbor but Montana. That's because of low wages in the state.

This shows how many dollars per capita go to state and local taxes in Idaho and its neighbors.
Credit Adam Cotterell / Information from the Tax Foundation

According to the Tax Foundation, people in only two states pay less money per capita in state and local taxes than Idahoans. Tax Foundation policy analyst Jared Walczak says that’s due to the comparative size of the economy; they lists just four states nationally as having lower per capita incomes than Idaho.

So people in Idaho are paying more of their income in state and local taxes than people in Washington, but Washington gets a lot more money per person than Idaho because of its higher average wages.

And different states in the region have different taxing strategies. Idaho and Utah have similar strategies spreading revenue more or less evenly between property, sales and individual income tax. Washington, Nevada and Wyoming don’t have individual income tax. Oregon and Montana don't have sales tax. Some states rely heavily on the “other taxes’ category. Wyoming relies on revenue from natural resource extraction for example.

This shows how much Idaho and each of its neighbors rely on different kinds of taxes.
Credit Adam Cotterell / Information from the Tax Foundation

Last week the Speaker of Idaho’s House, Scott Bedke (R-Oakley) said if times allows during the current legislative session, he and others in the House want to lower Idaho’s income tax rates.

“Which we feel are too high to be competitive with some of our neighbors,” Bedke explained.

Here’s how Idaho’s personal income tax brackets compare to its neighbors that have an income tax:

Idaho

  • 1.60% > $0
  • 3.60% > $1,428
  • 4.10% > $2,857
  • 5.10% > $4,286
  • 6.10% > $5,715
  • 7.10% > $7,144
  • 7.40% > $10,717

Montana

  • 1.00% > $0
  • 2.00% > $2,800
  • 3.00% > $5,000
  • 4.00% > $7,600
  • 5.00% > $10,300
  • 6.00% > $13,300
  • 6.90% > $17,000

Oregon

  • 5.00% > $0
  • 7.00% > $3,350
  • 9.00% > $8,400
  • 9.90% > $125,000

Utah

  • 5.00% > $0

Oregon has higher income taxes than Idaho. Montana’s tax brackets are a little lower than Idaho’s, while Utah’s flat rate means some people pay more and some pay less than they would in the Gem State.  

Some people don’t put much faith in the role of tax rates in a state’s “competitiveness.”  But, the Tax Foundation’s Jared Walczak tends to agree with Scott Bedke that Idaho’s income tax makes it less competitive than its neighbors.

The report ranks states on business tax climate, which includes corporate and individual income tax, property taxes, sales tax and unemployment insurance tax. Idaho ranks 19th nationally but lower overall than any of its neighbors.

“Idaho does very well on property taxes,” Walczak says. “[It has] very high unemployment insurance taxes, [and is] middle of the pack in pretty much everything else. So, it’s modestly competitive but [there's] a lot of room to improve.”

Find Adam Cotterell on Twitter @cotterelladam

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