Updated October 5, 2026. Quick answer: Yes. Idaho taxes annuity income at a flat rate, and the booklet says “Effective January 1, 2025, the individual income tax rate is 5.3%.” A retirement deduction exists for a short list of government plans; the statute says other taxpayers “may not deduct any amount of retirement benefits under this section”.
State retirement-income forms, line by line: Idaho Form 39R.
How Idaho treats annuity income
| Item | What the documents say |
|---|---|
| Treatment | Taxed at a flat rate; a narrow government-plan deduction |
| Rate | 5.3% of taxable income over $2,500 for a single filer, or over $5,000 for joint filers (Idaho Code 63-3024) |
| The deduction | For 2025 capped at $48,216 single or $72,324 married filing jointly, reduced by Social Security and Railroad Retirement benefits, generally from age 65 (62 if disabled) |
| Who qualifies | Civil Service Retirement System annuities, Idaho firefighter and certain police funds and certain military retirement; the booklet says “Retirement System (FERS) don’t qualify for the deduction.” |
| Purchased annuities | The documents read do not address annuities bought outside a retirement plan |
A $24,000 example
A commercial annuity paying $24,000 a year gets no deduction, so the flat rate applied to the whole amount is $1,272, computed as $24,000 x 5.3%, before the $2,500 threshold and any other deduction.
A filer 65 or older with a qualifying CSRS annuity of $24,000 and no Social Security is within the $48,216 cap, so the whole amount is deductible and adds $0.
What changes in 2026
The latest documents read print no 2026 change to the way annuity income is taxed.
Federal rules
The state’s treatment sits on top of the federal one. The IRS explains the federal side in Topic no. 410, Pensions and Annuities and Publication 575, Pension and Annuity Income.
Related: whether Idaho taxes pensions, how Idaho taxes retirement income, state tax on 401(k) and IRA withdrawals, how a surrendered annuity is taxed, and pension and annuity decisions.
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Answer againSources
- Individual Income Tax General Information and Form 39R Instructions, 2025 (Idaho State Tax Commission): https://tax.idaho.gov/wp-content/uploads/forms/EIN00046/EIN00046_03-02-2026.pdf
- Idaho Code 63-3022A, Deduction of certain retirement benefits (Idaho Legislature): https://legislature.idaho.gov/statutesrules/idstat/title63/t63ch30/sect63-3022a/
- Idaho Code 63-3024, Tax imposed on individuals (Idaho Legislature): https://legislature.idaho.gov/statutesrules/idstat/title63/t63ch30/sect63-3024/
Sources: the primary documents linked above, read on October 5, 2026. General information, not tax advice. Your own facts decide the outcome, and a preparer, the plan administrator or the agency itself is the right place to confirm anything consequential.