Idaho sales and use tax is a flat 6% charged on most retail sales of tangible goods and on out-of-state purchases brought into the state when the seller doesn’t collect Idaho tax.1Idaho State Legislature. Idaho Code 63-3619 – Imposition and Rate of the Sales Tax The same rate applies to certain digital products, hotel stays of 30 days or less, and groceries, though residents can claim an annual credit that offsets part of the grocery cost. Some resort cities add a local option tax on top of the 6%. The sections below walk through what’s taxed, when you owe use tax, the rules for online and marketplace sellers, how to register and file, and the main exemptions.
What Idaho Taxes at 6%
The 6% rate applies to retail sales of tangible personal property, which Idaho law defines as property you can see, weigh, measure, feel, or touch.2Idaho State Legislature. Idaho Code 63-3616 – Tangible Personal Property That’s furniture, electronics, clothing, vehicles, building materials, and the like. Hotel and motel rooms rented for 30 days or less are also subject to sales tax, plus a separate travel and convention tax.3Idaho State Tax Commission. Travel and Convention Tax
Idaho is a destination-based state. When a seller ships to a buyer, the tax rate is set by where the goods are delivered, not where the seller is located.
Digital Products
Idaho taxes digital music, books, videos, and games when the buyer gets a permanent right to use the product, whether delivered by download or on a disc. Access that depends on continued subscription payments isn’t a permanent right, so streaming services fall outside the tax. Software follows similar logic: prewritten software on physical media is taxable, but custom software, electronically delivered software, and cloud-based (SaaS) software are exempt.2Idaho State Legislature. Idaho Code 63-3616 – Tangible Personal Property Buying an e-book outright triggers the tax; a monthly e-book subscription does not.
Groceries and the Grocery Tax Credit
Idaho taxes food at the grocery store at the full 6% rate. To offset that cost, the state gives every Idaho resident a grocery tax credit on the individual income tax return regardless of income. The credit is $155 per person as of 2025. A ballot initiative to repeal the grocery tax has been proposed, but the 6% rate on food remains in effect for now.
Local Sales Taxes
More than 20 Idaho resort cities levy a local option tax on top of the state 6%, adding roughly 1% to 3% depending on the city.4Idaho State Tax Commission. City Sales Taxes Ketchum, Sun Valley, McCall, Sandpoint, and Driggs are among them. Voters in each city approved their local tax, and the combined rate applies to purchases made within that city’s boundaries.
When You Owe Use Tax
Use tax kicks in at the same 6% rate whenever you buy something for use in Idaho and the seller doesn’t charge sales tax.5Idaho State Legislature. Idaho Code 63-3621 – Imposition and Rate of the Use Tax – Exemptions Common situations include online purchases from out-of-state retailers who aren’t required to collect Idaho tax, private-party purchases of vehicles or equipment, and items bought while traveling in a state with no sales tax or a lower rate. The buyer is personally liable, and the liability doesn’t disappear until the tax is paid.
Use tax also comes up on the business side. When a business owner pulls inventory bought tax-free for resale and uses it personally or gives it away, that conversion triggers use tax. Individuals report use tax on their Idaho income tax return. Registered businesses report it on the regular sales tax return.
Rules for Out-of-State and Marketplace Sellers
Since 2018, states can require out-of-state sellers to collect sales tax without a physical presence. Idaho’s economic nexus threshold is $100,000 in gross sales into the state during the current or previous calendar year.6Idaho State Legislature. Idaho Code 63-3615A – Substantial Nexus There’s no separate transaction-count threshold, so only the dollar amount matters.7Idaho State Tax Commission. Guides for Different Business Types – Online Sellers Once a remote seller crosses $100,000, it must register for an Idaho seller’s permit and start collecting the 6% tax on the next sale.
Marketplace facilitators have been responsible for collecting and remitting tax on third-party sales through their platforms since June 1, 2019.7Idaho State Tax Commission. Guides for Different Business Types – Online Sellers Idaho defines a marketplace facilitator broadly, covering platforms that contract with sellers to handle listings, payment processing, order-taking, or fulfillment.8Idaho State Legislature. Idaho Code 63-3605E – Marketplace Facilitator Amazon, eBay, and Etsy all qualify. The same $100,000 threshold applies to facilitators, but it counts both their own sales into Idaho and the third-party sales they facilitate.
If you sell exclusively through a marketplace facilitator, the facilitator handles Idaho tax collection and remittance for you. Verify that Idaho tax is actually being collected on your transactions before assuming you’re covered.
Getting a Seller’s Permit
Any business making retail sales in Idaho needs a seller’s permit before collecting tax. Registration is free through the Idaho Business Registration (IBR) application, an online form hosted jointly by the Idaho State Tax Commission and the Department of Labor.9Idaho State Tax Commission. Getting Tax Permits Before you start, have these ready:
- Your federal Employer Identification Number (EIN) if you have one, plus Social Security numbers for all owners, partners, and corporate officers.
- Legal business name, physical and mailing addresses, the date the business began operating in Idaho, and any incorporation dates.
- Expected employee count, first paycheck date, and hire dates if you plan to have employees.
A printable PDF version is available if you can’t complete the online form. Register your business and any assumed business names with the Idaho Secretary of State before applying for tax permits. Once the Tax Commission processes the registration, you’ll get your seller’s permit and be assigned a filing frequency.
Filing Frequency and Due Dates
The Tax Commission sets your filing frequency based on how much tax you expect to collect. Most retailers file monthly, and the return and payment are due by the 20th of the following month. If the 20th falls on a weekend or holiday, the deadline shifts to the next business day.10Idaho State Tax Commission. Sales Tax Filing and Paying Tax collected in July is due August 20.
Businesses owing less than $750 per quarter may be assigned to quarterly filing, with returns due within 20 days after each quarter ends. Distributors and wholesalers with minimal retail sales can apply to file semiannually (due July 20 and January 20) or annually (due January 20). Even if you made no sales during a period, file a zero-dollar return. Skipping a period because nothing is owed is a common mistake and triggers penalties anyway.
Returns and payments go through the Idaho Taxpayer Access Point (TAP), the Tax Commission’s online portal, which accepts electronic checks and credit cards.
Late Filing Penalties and Interest
Filing late and paying late are separate problems with separate penalties. If you don’t file on time, the penalty is 5% of the tax due per month the return is late, capped at 25%. If you file but don’t pay, the penalty drops to 0.5% of the unpaid tax per month, with the same 25% cap.11Idaho State Legislature. Idaho Code 63-3046 – Penalty The minimum penalty either way is $10, even for a single day late.10Idaho State Tax Commission. Sales Tax Filing and Paying
Interest runs on top of the penalty. Idaho sets the rate each year as 2% plus the federal midterm rate from the previous September 15, rounded to the nearest whole number.12Idaho State Legislature. Idaho Code 63-3045 – Interest Interest accrues from the original due date until the tax is paid in full. A business that files on time and pays late is in much better shape than one that ignores the deadline entirely.
Main Sales Tax Exemptions
Idaho exempts a range of purchases from the 6% tax. Three categories cover most of the exempt activity.
Production Exemption
Equipment and supplies used directly in manufacturing, mining, farming, fabricating, or processing operations are exempt, provided the production use is the primary use of the property and the items are necessary to perform the operation.13Idaho State Legislature. Idaho Code 63-3622D – Production Exemption That covers industrial machinery on a factory floor, combine parts for a farming operation, and mining drill components. Repair parts, lubricants, and coolants that become part of production equipment also qualify.14Cornell Law Institute. Idaho Admin Code 35.01.02.079 – Production Exemption
Government and Nonprofit Purchases
Sales to the state of Idaho, its agencies, and its political subdivisions are exempt. So are purchases by qualifying nonprofit organizations, including hospitals, educational institutions, food banks, volunteer fire departments, licensed emergency medical agencies, and centers for independent living. One limit: when a contractor uses materials to improve real property owned by an exempt organization, the contractor’s purchase of those materials is not exempt.15Idaho State Legislature. Idaho Code 63-3622O – Exempt Private and Public Organizations
Prescription Drugs and Medical Equipment
Prescription medications, insulin, hearing aids, eyeglasses, prosthetic devices, and durable medical equipment are exempt when purchased under a practitioner’s prescription or work order.16Idaho State Legislature. Idaho Code 63-3622N – Prescriptions The list also covers wheelchairs, hospital beds, oxygen equipment, catheters, and diabetic testing supplies. Over-the-counter medications bought without a prescription do not qualify.
Claiming an Exemption at the Register
To make a tax-exempt purchase, the buyer gives the seller a completed and signed Form ST-101, Idaho’s Sales Tax Resale or Exemption Certificate, which the seller keeps on file.17Idaho State Tax Commission. Form ST-101 – Sales Tax Resale or Exemption Certificate If the certificate isn’t valid, the seller becomes liable for the uncollected tax. If a buyer claims an exemption for goods that don’t qualify, the buyer is responsible for the tax. Both sides have reason to get the paperwork right.