Updated October 5, 2026. Quick answer: Yes. Idaho taxes trust income at a flat 5.3% for 2025, and the statute says a tax is “imposed upon every individual, trust, or estate required by this chapter” to file a return.
How Idaho treats trust income
| Item | What the documents say |
|---|---|
| Treatment | Idaho taxes trusts and estates on Idaho taxable income under Idaho Code 63-3024, with a return on Form 66. In the source’s words, “imposed upon every individual, trust, or estate required by this chapter” to file a return. |
| Who counts as a resident trust | The State Tax Commission treats a trust as resident when at least three of five listed connections to Idaho exist, covering the grantor, the trustee, governing law, trust property and administration. The source says: “is a resident trust if at least three of the following occur”. |
| Rate on trust income | The statute sets one rate for individuals, trusts and estates, and the 2025 Form 66 schedule applies 5.3% to the excess over $4,811. The source says: “5.3% of excess over $4,811”. The statute prints a $2,500 threshold that the Commission adjusts for inflation. |
| Distribution deduction | Form 66 has a line for an income distribution deduction, and the instructions tell the fiduciary to enter the deduction for distributions to beneficiaries. The source says: “Income distribution deduction to beneficiaries”. The documents read do not define the deduction beyond the form and instructions. |
| Nonresident trusts | A trust that is not resident reports Idaho source income the way a nonresident individual would. In the source’s words, “nonresident trust with income earned from Idaho sources must report that income” to Idaho the same way a nonresident individual would. |
| Return to file | A fiduciary files Form 66, and a resident trust with gross income of $100 or more that must file a federal return is within the filing rule. In the source’s words, “A fiduciary must file Form 66” when any of the listed circumstances apply. |
| Grantor trusts | Trust income taxable to the grantor under the federal grantor trust rules is not taxed on the fiduciary return and is shown on a separate statement. |
| Permanent building fund tax | A trust that meets the filing requirement and does not distribute all of its Idaho adjusted income pays a $10 permanent building fund tax. |
A $10,000 example
On the 2025 Form 66 schedule, a trust with $10,000 of taxable income that it keeps is taxed at 5.3% of the excess over $4,811, computed as ($10,000 minus $4,811) x 5.3% = $275.02, before any credit the state allows. Federal tax on the trust’s income still applies.
Income the trust passes out to a beneficiary is handled as the distribution deduction row above describes.
What changes in 2026
The latest documents read print no 2026 change to how trust income is taxed.
Federal rules
The state’s treatment sits on top of the federal one. The federal brackets a trust faces are laid out in trust tax brackets versus individual brackets, and capital gains that a trust keeps are covered in capital gains stay in the trust. The IRS explains the federal return in the About Form 1041 page.
Related: how Idaho taxes retirement income, whether Idaho taxes pensions, what a living trust costs in Idaho, federal trust tax brackets, and trust income tax by state.
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Answer againSources
- Income Tax for Fiduciaries (Idaho State Tax Commission): https://tax.idaho.gov/taxes/income-tax/business-income/guides-for-certain-businesses/income-tax-for-fiduciaries/
- Idaho Code 63-3024, Individuals’ tax and tax on estates and trusts (Idaho Legislature): https://legislature.idaho.gov/statutesrules/idstat/Title63/T63CH30/SECT63-3024/
- Form 66 Fiduciary Income Tax Return and Instructions, 2025 (Idaho State Tax Commission): https://tax.idaho.gov/document-mngr/forms_EFO00036
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.