Idaho lesson 5 of 6
Idaho LLC taxes, licenses and permits
Idaho has no franchise tax on LLCs. Members of a pass-through LLC pay Idaho's flat individual income tax on their share of profit, at the same rate the state applies to corporate income.
How members are taxed
A default Idaho LLC taxed as a partnership or sole proprietorship for federal purposes passes income through to its members, who report their share on their Idaho individual income tax return. House Bill 40, effective retroactively to January 1, 2025, lowered Idaho's flat individual income tax rate from 5.695% to 5.3%. Confirm the current rate on the Tax Commission's rate schedule each filing season, since Idaho has cut this rate in multiple recent years and it is set by statute that can be revised again.
An LLC that elects C corporation tax treatment for federal purposes instead pays Idaho's corporate income tax, also lowered to a flat 5.3% by the same 2025 legislation, matching the individual rate rather than sitting at a separate higher figure.
Sales tax and licensing
If you sell taxable goods or certain services, register for a seller's permit through Idaho Business Registration before you start selling, and collect Idaho's state sales tax rate plus any local option tax that applies in your area. If you have employees, register for a withholding account at the same time.
Idaho does not have a single general statewide business license. Licensing requirements depend on your industry, for example contractors and certain professions requiring a state board license, and in some cases on your city or county.
Key takeaways
- The flat individual and corporate income tax rate is 5.3%, effective retroactively to January 1, 2025.
- There is no LLC franchise tax; a C-Corp election pays the same 5.3% flat corporate rate.
- Check both state board licensing for your industry and any local city or county requirements.
Frequently asked questions
Does Idaho have a franchise tax on LLCs?
No. Idaho does not levy a separate franchise tax on LLCs. A pass-through LLC's members pay the flat 5.3% individual income tax on their share of profit, and a C-Corp election pays the matching 5.3% corporate rate.
Is there a statewide business license in Idaho?
No single general license covers all businesses. Check with your city or county and with any state board that regulates your specific industry.
Official sources
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Last reviewed: September 2026 - reviewed by Gullia Filing Legal & Formation Team