Idaho retired pay

Is military retirement taxed in Idaho?

Partly taxed

Single Cap $48,216 Less Social Security.

Partly. For tax year 2025, Idaho lets a military retiree deduct retired pay if the retiree is disabled, 62 or older, or under 62 with a job that pays enough to require a federal return. The deduction is capped at $48,216 single or $72,324 joint, and every dollar of Social Security or Railroad Retirement benefits you and your spouse receive lowers that cap.

The law: Idaho Code § 63-3022A(1)(b)
Current rule since: tax year 2025 (H0040, 2025 Session Laws ch. 13, retroactive to January 1, 2025); before that, military retirees had to be 65, or 62 and disabled
Where you claim it: Form 39R, Part B, line 8 (lines 8a to 8f); the Part B total on line 24 goes to Form 40, line 10

Read on Idaho’s own sources October 9, 2026

What Idaho’s rule is worth on your retired pay

Enter your annual taxable retired pay (box 2a of your DFAS or Coast Guard 1099-R). The rate starts at Idaho’s flat 5.3% rate for 2025 (taxable income over $4,811 single, $9,622 joint) for tax year 2025; change it to your own bracket if you know it.

One rate applied to the whole amount, not Idaho’s full return: brackets, other income, deductions and credits change the real figure. Use it to compare, then check the state’s own form instructions.

How it works in Idaho

Settle eligibility before any math. The 2025 Form 39R instructions give retired service members three routes: classified as disabled at any age, age 62 or older, or under 62 and employed during the year with enough income from that job to require a federal return. A 50-year-old retiree with no job and no disability deducts nothing, however large the pension.

Then fill in Form 39R, Part B, lines 8a to 8f. Line 8a is $48,216 single or $72,324 married filing jointly for 2025. Lines 8b and 8c take away the Railroad Retirement benefits and the Social Security benefits (Box 5 of each SSA-1099) that you and your spouse received. Line 8f is the smaller of what remains or the qualifying retired pay in federal income, and the Part B total reaches Form 40, line 10.

Two assumed cases at the 5.3% rate. A single 55-year-old with no Social Security, $30,000 of retired pay and a civilian job that pays enough to require a federal return deducts all $30,000, worth about $1,590. A single 66-year-old with $40,000 of retired pay and $24,000 of Social Security has only $24,216 of room, so $15,784 of the pension is taxed and the deduction is worth about $1,283.

Married couples must file jointly. Idaho Code § 63-3022A(2) sets amounts only for joint filers, unmarried filers and unremarried surviving spouses, and subsection (2)(e) bars everyone else, which shuts out married filing separately. On a joint return the $72,324 is a household figure: two military retirees share it rather than taking $48,216 each.

The routes for retirees under 62, and for retirees aged 62 to 64 who are not disabled, come from H0040, which the Legislature made retroactive to January 1, 2025. Those retirees had no deduction on a 2024 return, so amending 2024 gains them nothing. For the years that do qualify, the refund claim on an amended return is due within three years from the date the original return was filed.

Survivor Benefit Plan annuities

Deductible on the same terms. Idaho Code § 63-3022A(1)(b) covers the unremarried widow or widower of a military retiree, and the Tax Commission's Retirement Benefits Deduction page says a surviving spouse who has not remarried and meets the disabled, age 62 or employment test might qualify. Form 39R prints no separate survivor amount, so the survivor uses the line 8a cap with the same Social Security reduction (read October 9, 2026).

Active-duty pay in Idaho

Taxed while stationed in Idaho. An Idaho resident on active duty that is continuous for 120 days deducts active-duty pay for service outside Idaho on Form 39R, Part B, line 11; pay earned while stationed in Idaho stays taxable.

Missed it in an earlier year?

A refund claim on an amended return must be filed within three years from the original return filing date, or within one year after an IRS audit closes for an amendment caused by that audit (2025 Idaho instructions, EIN00046). Amend on Form 40 with the amended return box checked.

What trips Idaho retirees up

Idaho does not tax Social Security (Form 39R, Part B, line 7 subtracts the taxable part), yet the same benefits shrink the military cap. A single retiree drawing $48,216 or more of Social Security gets no military deduction at all.
The 2025 instructions count a veteran of a U.S. war with a VA service-connected disability rating of 10% or more as disabled. That route works at any age with no job requirement, which matters for a retiree under 62 who is not working.
The Tax Commission's Retirement Benefits Deduction page lists the 65, or 62 and disabled, test first because it governs civil service annuities. Retired service members follow the separate, looser list below it, so keep reading past the first test (read October 9, 2026).
The caps track the maximum Social Security benefit and are recalculated every year. The 2025 figures are $48,216 and $72,324; use the amounts printed on line 8a for the year you file.

Federal side: DFAS reports retired pay on Form 1099-R, and the IRS taxes it as a pension. VA disability compensation is not taxable income under federal law (IRS Publication 525). The SCRA’s tax-home rule (50 U.S.C. § 4001) protects servicemembers on orders, not retirees, so where a retiree lives decides which state taxes the pension. Compare every state on the 51-state ledger. Idaho’s other servicemember protections are on the Idaho SCRA page.

Frequently asked questions

Does Idaho tax military retirement?

Partly. Idaho Code § 63-3022A lets a retired service member deduct military retired pay if the retiree is classified as disabled, is 62 or older by year end, or is under 62 and earned enough from a job to be required to file a federal return. For 2025 the deduction is capped at $48,216 for single filers and $72,324 for joint filers, and the cap drops by the Social Security and Railroad Retirement benefits you and your spouse received. Claim it on Form 39R, Part B, line 8, per the 2025 instructions read October 9, 2026. What is left is taxed at Idaho's flat 5.3% rate.

Can I take the Idaho military retirement deduction before age 62?

Yes, in two cases. Since tax year 2025, a retiree under 62 qualifies if classified as disabled, or if employed during the year with enough income from that employment to be required to file a federal return. H0040, which made the change, is retroactive to January 1, 2025. The 2025 Form 39R instructions list a veteran of a U.S. war with a VA service-connected rating of 10% or more among those classified as disabled. A retiree under 62 who neither works nor is disabled gets no deduction for 2025. Before 2025, military retirees had to be 65, or 62 and disabled.

Why did my Idaho military retirement deduction drop when I started Social Security?

Because Idaho subtracts Social Security from the cap. On the 2025 Form 39R, line 8a starts at $48,216 single or $72,324 joint, and lines 8b and 8c take away the Railroad Retirement and Social Security benefits you and your spouse received, using Box 5 of the SSA-1099. Line 8f is the smaller of what is left or your qualifying retired pay. A single retiree with $20,000 of Social Security has a cap of $28,216. The Social Security itself is not taxed by Idaho; it comes off separately on line 7.

Is SBP taxed in Idaho?

Only the part above the capped deduction, if the survivor qualifies. Idaho Code § 63-3022A(1)(b) extends the military retirement deduction to the unremarried widow or widower of a retired member, under the same disabled, age 62 or employment test. The Tax Commission's Retirement Benefits Deduction page says a surviving spouse who receives the deceased spouse's pension and meets those criteria might qualify, and that a remarried spouse cannot (read October 9, 2026). The deduction is still capped and still reduced by Social Security received, and the remainder is taxed at 5.3%.

Sources, read October 9, 2026

Know someone this saves money? Pass it on

Heads up: SCRA Saver publishes general information, not legal or financial advice. Laws change and every situation differs. Confirm details with your installation legal assistance office (free for service members) or a licensed professional.