The state is also providing additional funding for the Property Tax Reduction program, also known as the Circuit Breaker Program. This program helps you as a low- and middle-income taxpayer with your property taxes, and more people now qualify for the program due to relaxed income requirements.
Other notable tax changes for 2023 include an increase in the standard deduction for you as an Idaho taxpayer, a new tax credit for if you’re a military member and veteran, an expansion of the Idaho Working Families Tax Credit, and if you’re an Idaho business owner, don’t forget about the new tax credit for research and development expenses.
This is a great opportunity to reduce your tax liability and invest in the future of your business. These tax changes are a big win for you! They make tax filing easier, reduce your taxes, and help to boost your state’s economy. So, are you curious already? Then read on to find out exactly what these changes are!
Idaho State Taxes: 2023 Update
1. Income tax
2. Dependent care tax deduction increased
3. Grocery credit increased
4. Product tax
5. Property tax
Recap
1. Income tax
Idahoan, listen up! This 2023, you’re paying a flat income tax rate of 5.8%, regardless of your income level. This means you save money on your taxes, especially if you’re in the lower income brackets.
For example, if you’re a single taxpayer with an income of $20,000, you save $165 per year under the new tax rate. And if you’re a married couple with an income of $40,000, you save $330 per year.
On average, Idaho households can save $251 per year under the new flat income tax rate. That’s a lot of money you can put toward your financial goals, such as paying down debt, saving for retirement, or just enjoying life more.
The new flat income tax rate is also simpler and easier to understand than the previous tax system. You have an easier time filing your taxes and reducing the risk of errors.
Overall, the new flat income tax rate is a positive change for Idaho taxpayers. It’s simpler, fairer, and more affordable.
So what can you do to take advantage of the new flat income tax rate?
- Review the new tax laws and claim all the tax credits and deductions that you’re eligible for. You can find more information on the Idaho State Tax Commission website.
- If you have complex tax needs, consider hiring a tax professional to help you prepare your return.
- Be sure to pay your taxes on time.
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2. Dependent care tax deduction increased
The dependent care tax deduction has increased from $3,000 to $6,000 per child under 13 or disabled dependent of any age. You can save $600 per year on your taxes with the new dependent care tax deduction!
If you have two young children, you can claim a $6,000 deduction for childcare expenses, which is double the previous deduction. This means that you can save more money on your taxes to help offset the cost of childcare.
To claim the new deduction, you need to file Form 2441 with your tax return. You can find more information on the Internal Revenue Service website.
Here are some tips for claiming the deduction:
- Keep all receipts for childcare and eldercare expenses.
- If you use a dependent care account (FSA or DCSA), get a statement from your employer at the end of the year.
- If you have multiple children under 13, claim the deduction for each child.
- If you have a disabled dependent, claim the deduction for them regardless of their age.
The dependent care tax deduction is a great way for your family to save money on your taxes and offset the cost of childcare and eldercare. If you qualify, be sure to claim it on your next tax return.
3. Grocery credit increased
Your grocery credit has increased from $100 to $150 per person or $300 per family! You can save money on your groceries, which have been getting more expensive lately.
The increase in the grocery credit benefits over 1.7 million Idahoans, including you! On average, you can save $15 per year under the new credit.
To claim the grocery credit, you need to file your Idaho state income tax return. You can find more information on the Idaho State Tax Commission website.
Here’s how the new grocery credit works:
- If you are a single taxpayer, you receive a $150 credit.
- If you are married and filing jointly, you receive a $300 credit.
- If you have qualifying dependents, you receive a $150 credit for each dependent.
The grocery credit is a great way to save money on your groceries. Be sure to claim it on your next Idaho state income tax return!
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4. Product tax
Idaho State has repealed the product tax on groceries, so you can now save money on your groceries! This means you no longer pay a 6% tax on food and beverage items, including prepared foods.
The repeal of this tax saves Idahoans millions of dollars each year, including you! On average, Your households can save $100 per year under the repeal of this tax.
This is a significant savings that you can use to pay down debt, save for retirement, or simply enjoy life a little more.
5. Property tax
If you’re an Idahoan homeowner, you can save money on your property taxes because the state provides additional funding for the Property Tax Reduction program, also known as the Circuit Breaker Program! If you have low or middle income, you now qualify for the Property Tax Reduction program, which can help you save money on your property taxes!
The additional funding saves Idahoans $355 million over the next two years, including you! On average, you can save $200 per year under the increased funding for this program.
These are the major tax changes in Idaho in 2023. For more information on these changes, please visit the Idaho State Tax Commission website.
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Recap
Idaho is making several changes to its tax code in 2023 that will benefit taxpayers. The most significant change is the new flat income tax rate of 5.8%, which will simplify the previous four-bracket system and likely result in lower taxes for some taxpayers, particularly those in the lower income brackets.
The state is also providing additional funding for the Property Tax Reduction program, which helps low- and middle-income taxpayers with their property taxes. More people now qualify for the program due to relaxed income requirements. Other notable tax changes for 2023 include an increase in the standard deduction for Idaho taxpayers, a new tax credit for military members and veterans, an expansion of the Idaho Working Families Tax Credit, and a new tax credit for research and development expenses for Idaho business owners.
This post is to be used for informational purposes only and does not constitute legal, business, or tax advice. Each person should consult his or her own attorney, business advisor, or tax advisor with respect to matters referenced in this post. . For comprehensive tax, legal or financial advice, always contact a qualified professional in your area. S’witty Kiwi assumes no liability for actions taken in reliance upon the information contained herein.
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