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Understand Sales Tax for Food & Beverage
Idaho Offers Residents a Grocery Sales Tax Credit
byMay 6, 2021
Idaho is one of only six states where grocery items, such as bread or canned goods, are fully taxable. (See how every state taxes groceries here.)
In most states, grocery items are either totally tax exempt, or taxed at a reduced rate. Policymakers have argued that taxing grocery items makes it difficult for lower income shoppers to make healthy food choices, citing the statistic that lower income shoppers pay a larger share of their income in sales tax. (You can read more about the human cost of sales tax on grocery items here.)
Some of this thinking may have influenced the state of Idaho’s decision to offer a tax credit on grocery items.
What is Idaho’s tax credit on groceries?
The state of Idaho allows Idaho residents to claim an average of a $100 income tax credit per person on grocery purchases made in the state. This credit is intended to make up for a portion of the sales tax that Idaho residents paid on groceries throughout the year.
In order to obtain the grocery credit, residents must determine their grocery credit eligibility on the Grocery Credit Worksheet as part of Form 40 on your Idaho income tax return.
While most Idaho residents can claim $100 per person (this includes spouse, dependents, etc.) Idaho residents aged 65 or older can claim an additional $20 for a total of $120 per year. Residents who only resided in Idaho part of the year can claim $8.33 in grocery sales tax credit per month.
According to Idaho law, Idaho’s grocery tax credit is not available to individuals who were incarcerated, received assistance from the federal food stamp program, or who did not reside legally in the United States.
What if I’m not required to file an Idaho income tax return?
Residents who do not make enough in income to file an Idaho income tax return are in luck. You can still claim the Idaho grocery tax credit and receive a refund even if you are not required to file an income tax return.
You must still file a form, and the Idaho State Tax Commission provides a handy worksheet here to determine which form you must use to claim your refund.
Have more questions about Idaho sales tax? Read our Idaho Sales Tax Guide.
Ready to automate sales tax? To learn more about TaxJar and get started, visit TaxJar.com/how-it-works.
Your food taxability checklist
Food and beverage taxability is complicated, and collecting and filing correctly can be difficult. Use this checklist to make sure you’re compliant.Download the checklist