Mostly taxed
How Idaho taxes retirement income
Idaho does not tax Social Security, but most other retirement income is taxed at its flat rate of 5.3%. That includes PERSI Base Plan pensions, pensions from other states, company pensions and withdrawals from 401(k), 403(b), 457(b) and IRA accounts.
Idaho does have a retirement benefits deduction, but it covers only certain pensions: federal civil service and military retirement, Idaho firefighter and certain city police pensions, and PERSI benefits tied to police work that was not covered by Social Security. To claim it you must be 65, or 62 and disabled, and the deduction is reduced by your Social Security benefits. Regular PERSI Base Plan benefits do not qualify.
For a retired Idaho teacher with a $40,000 PERSI pension, Idaho tax is roughly 5.3% of the pension after the standard deduction, which comes to about $1,300 a year for a single filer.
Questions
Does Idaho tax PERSI pensions?
Yes. PERSI Base Plan benefits are taxed. Only certain police and firefighter benefits qualify for Idaho’s retirement deduction.
Does Idaho tax Social Security?
No.
Who can use the retirement benefits deduction?
Recipients of qualifying federal, military, firefighter and certain police pensions who are 65, or 62 and disabled.