Updated October 16, 2026. Quick answer: Not as a rule. Idaho’s tax agency says “The entity paying the nonwage income might not withhold Idaho tax”, and a retiree paid through PERSI chooses on PERSI’s own form whether any Idaho tax is withheld.
Idaho pension withholding at a glance
| Item | What the documents say |
|---|---|
| Is state withholding required on regular pension payments? | Not necessarily. The Idaho Tax Commission says the payer of nonwage income might not withhold Idaho tax, so whether yours does depends on the payer |
| Default rate if you give the payer no form | None stated. PERSI’s form lets you pick no withholding, a flat dollar amount or percentage you name, or the Idaho tax tables |
| Lump sum or one-time payment | The documents read give no separate lump-sum rule |
| Form to start, change or stop it | Form ID W-4 or the payer’s own substitute; PERSI retirees use PERSI form RS322 |
| Changed for 2026? | No change stated |
What the Idaho documents say
Idaho’s State Tax Commission update on the Form W-4 says the payer of non-wage income might not withhold Idaho tax. If the payer will withhold Idaho tax, the update says to use Form ID W-4 or the payer’s own substitute to work out your Idaho status, allowances and any additional amount.
A retiree who is paid by the Public Employee Retirement System of Idaho (PERSI) uses PERSI’s form RS322, State of Idaho Tax Withholding. On it you can choose no withholding, a flat dollar amount, a fixed percentage, or Idaho’s tax tables. To stop, you check the box that says “Do not withhold Idaho tax”.
The form also says “The withholdings you indicate on this form will replace your current withholdings”, so a new RS322 replaces the choice already on file.
What a mover should know
This page is about Idaho as a state of residence. An instruction line written for a nonresident or part-year filer is not the rule for a resident, and none of the documents read settles a part-year or two-state case, so check each state’s own rule. The federal side is the same everywhere; CMG’s federal 20% withholding on a pension lump sum page covers it, state tax withholding on IRA and 401(k) withdrawals in Idaho covers the account side, and state withholding on retirement withdrawals lists the other states checked.
What the documents do not say
- The documents read give no default rate and no lump-sum rule, and describe no change for 2026. Only PERSI’s form is described for a pension payer; for any other payer, ask what form it accepts.
Common mistakes
- Assuming the payer is withholding for the state because it withholds for the IRS: the Idaho Tax Commission says the payer might not withhold Idaho tax, so ask the payer whether it will.
- Assuming the answer for one state applies to another, or that state withholding settles the state tax owed at filing.
Related: state tax withholding on IRA and 401(k) withdrawals in Idaho, Idaho retirement taxes, whether Idaho taxes pensions, state withholding on retirement withdrawals, and retirement withholding calculator.
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Answer againSources
- Individual Income Tax Update W-4: https://tax.idaho.gov/?p=887
- State of Idaho Tax Withholding (RS322): https://www.persi.idaho.gov/docs/forms/RS322.pdf
- IRS Tax Topic 413, Rollovers from retirement plans: https://www.irs.gov/taxtopics/tc413
Sources: the primary documents linked above, read on October 16, 2026. General information, not tax advice. Your own facts decide the outcome, and a tax professional or the state agency itself is the right place to confirm anything consequential.