Idaho has no separate capital gains rate. A gain flows into your federal taxable income, which is where the Idaho return starts, and is taxed at the same flat rate as wages. The exception that matters is the Idaho capital gains deduction: 60% of the net gain from certain Idaho property can be subtracted, which cuts the effective Idaho rate on that gain to about 2.1%.
This guide uses the Idaho State Tax Commission's 2025 individual income tax booklet, its online income tax basics guide, Publication 648 and its July 2026 withholding tables, plus two IRS pages, all read on 3 November 2026. We could not read the Idaho Code itself (the legislature's website did not respond), so the statute section named in the booklet, Idaho Code 63-3022H, is cited only as the booklet cites it. We also read the 2025 Form CG and its instructions, which compute the deduction, and the Commission's capital gains deduction page.
The Commission's 2025 booklet says that effective January 1, 2025, the individual income tax rate is 5.3%, and its online guide says the income tax rate for 2025 is 5.3% on Idaho taxable income. The Form 40 tax worksheet takes your Idaho taxable income, subtracts $4,811 (single or married filing separately) or $9,622 (married filing jointly, head of household or qualifying surviving spouse), and multiplies the result by 5.3%.
We did not find a 2026 return rate or worksheet in the Commission's pages, because the 2026 booklet is not out yet. The Commission's withholding tables dated July 2026 apply 5.3% above $16,100 for a single annual payroll period, which suggests no change, but withholding tables are not the return schedule, so treat 5.3% as the 2025 rate and confirm the 2026 figure before you sell. The booklet also says Idaho conforms to the Internal Revenue Code as of January 1, 2026.
Publication 648 says the Idaho individual income tax return starts with federal taxable income, and the booklet says your Idaho filing status must be the same as your federal filing status. Capital gains reported on your federal return therefore enter Idaho income with everything else and are taxed at the flat rate. The Idaho capital gains deduction is then taken as a subtraction: the booklet lists it as line 10 of the resident supplemental schedule, with the instructions under Form 39R.
The federal holding-period line also matters for planning: the IRS says that if you hold an asset more than one year, the gain or loss is generally long-term. Idaho does not give long-term gains a lower rate on its own; the Idaho benefit is the deduction below.
The booklet says you might be able to deduct 60% of the capital gain net income reported on federal Schedule D from the sale of qualified Idaho property. The qualifying categories it lists are:
The booklet states that gains from the sale of stocks, goodwill and other intangibles do not qualify. You compute the deduction on Idaho Form CG and include it with your return.
Form CG and its instructions add limits. Only gains from Idaho property qualify, and the form asks for the Idaho location of the property at the date of sale. The Commission's capital gains deduction page also says real or tangible personal property not located in Idaho does not qualify and that timber must be grown in Idaho. That page is undated and also lists partnership interests as not qualifying, which differs from the 2025 booklet and Form CG instructions, so rely on the form for partnership sales. The deduction cannot exceed the capital gain net income on your federal return, gains treated as ordinary income do not qualify, and a capital loss carryover can reduce the gain only if the loss came from qualifying property. The deduction is the smaller of 60% of the net qualifying gain and your federal capital gain net income. If the net result is a loss, there is no deduction.
The table is our own arithmetic, not an Idaho publication. It assumes the full gain qualifies, your other income already exceeds the $4,811 single-filer worksheet amount (so the gain is taxed at the 5.3% rate), and the 2025 rate applies.
| Gain on qualifying Idaho property | 60% deduction | Gain left in taxable income | Idaho tax on gain, with deduction | Without deduction |
|---|---|---|---|---|
| $20,000 | $12,000 | $8,000 | $424 | $1,060 |
| $50,000 | $30,000 | $20,000 | $1,060 | $2,650 |
| $100,000 | $60,000 | $40,000 | $2,120 | $5,300 |
| $250,000 | $150,000 | $100,000 | $5,300 | $13,250 |
Because 40% of the gain remains taxable, the effective Idaho rate on a fully qualifying gain is 40% x 5.3% = 2.12%. Worked example, also ours: a single filer has $60,000 of other Idaho taxable income and a $100,000 gain on land held for five years. With no deduction, tax on the 2025 worksheet is ($160,000 - $4,811) x 5.3% = about $8,225; with the 60% deduction, taxable income is $100,000 and tax is about $5,045. Without the sale, tax is about $2,925, so the gain adds about $2,120 instead of about $5,300.
Idaho follows the federal starting point, so federal loss rules carry into the return. The Commission's Capital Gain or Loss Adjustment Worksheet, for losses incurred in another state or before you became a resident, uses the same limit of $3,000 ($1,500 if married filing separately) and tracks an Idaho loss carryover. The IRS says that if capital losses exceed gains, the loss you can claim to lower income is the lesser of $3,000 ($1,500 if married filing separately) or your total net loss, and losses on personal-use property such as a home or car are not deductible. Idaho also lets you subtract capital gain from the sale of precious metal or monetized bullion (Idaho Code 63-3622V), on line 23 of the Form 39R instructions.
For a home sale, the IRS says you may qualify to exclude up to $250,000 of gain, or $500,000 on a joint return. The Commission pages we read do not discuss home sales. Our reading is that because Idaho starts from federal taxable income, gain you exclude federally is not in the Idaho starting figure, but the Commission does not say so explicitly, so confirm with it for a large sale. Form CG has a line for the taxable gain from the sale of your Idaho home from federal Schedule D, so taxable gain on an Idaho home appears to be eligible for the 60% deduction. The 12-month holding period for real property still applies, and this is our reading of the form.
Gains on stocks and other intangibles are taxed at the full flat rate, because the booklet says they do not qualify for the deduction.
The booklet treats you as an Idaho resident if Idaho is your permanent home, or if you maintain a home in Idaho all year and spend more than 270 days in the state. Part-year residents and nonresidents use Form 43, and a nonresident has to file if total gross income from Idaho sources is more than $2,500.
The Form 43 instructions say that on the capital gain line you enter the gain or loss reported on Schedule D from the sale of capital assets located in Idaho, the sale of capital assets while you were residing in Idaho, and the receipt of installment sale proceeds while you were an Idaho resident. The booklet's Form 39NR instructions, which go with Form 43, give a capital gains deduction line (line 6, columns A and B) with the same 60% rule and property list. A gain on stock held by a nonresident is not described in the pages we read, so we do not state a rule for it.