Idaho Research Activities Credit
Idaho State Tax Commission
5% of Idaho QRE
5% Idaho R&D credit, 14-year carryforward
Idaho provides a non-refundable income tax credit of 5% on Idaho-located qualified research expenses (QRE), following the federal IRC §41 definitions. The credit can be carried forward up to 14 years. Idaho uses a volume-based calculation on all Idaho-located QRE rather than requiring an incremental base computation, simplifying the claim for smaller businesses. Unused credits may also be carried back 3 years.
- Funding type
- Tax Credit
- Level
- State
- Amount
- 5% of qualified research expenses (QRE) physically conducted in Idaho. Credit is non-refundable — offsets Idaho income tax liability only. Unused credit may be carried back 3 years or carried forward up to 14 years. Idaho follows federal IRC §41 QRE definitions but applies the credit on a volume (total QRE) basis, not an incremental basis.
- Realistic amount
- A Boise software company with $400,000 of Idaho-located QRE (wages + supplies) earns a $20,000 credit (5% × $400,000). I…
- Deadline
- Rolling — claimed annually on Idaho income tax return
- Status
- active
- States
- ID
- Payment model
- tax offset
Who qualifies
- Must conduct qualified research activities physically located within Idaho following federal IRC §41 four-part test
- Qualified research expenses include: wages of Idaho-based employees performing, supervising, or supporting qualified research; supplies consumed in Idaho research; 65% of Idaho contract research payments
- All entity types eligible: C-corporations, S-corporations, LLCs, partnerships, sole proprietors — must file an Idaho income tax return
- The credit is volume-based — applies to total Idaho-located QRE without a base-period calculation
- Credit is non-refundable but unused amounts carry back 3 years or carry forward up to 14 years
- No minimum revenue, employee count, or project size requirements
- Research must satisfy the §41 four-part test: technological in nature, for developing/improving a business component, conducted under conditions of uncertainty, and through a process of experimentation
What it covers
Eligible expenses
- Wages of Idaho-based employees directly performing qualified research activities
- Wages of Idaho-based employees directly supervising or supporting qualified research
- Supplies and materials consumed or destroyed in Idaho-located research
- 65% of payments to contractors for qualified research conducted in Idaho
- Computer rental for Idaho-located qualified research
Ineligible expenses
- Research conducted outside Idaho
- Research funded or reimbursed by a third party (government contracts, client-funded R&D)
- Social sciences, arts, humanities, routine adaptations
- Market research and consumer surveys
- Post-production quality assurance and routine data collection
- Capital equipment purchases
How to apply
-
1
Identify Idaho-located qualified research expenses
Calculate your total QRE using federal IRC §41 definitions but isolate only the Idaho-located portion. Wages for employees physically working in Idaho on qualified research activities, Idaho-location supply costs, and 65% of research contractor payments for work conducted in Idaho qualify. Maintain project-level timesheets showing Idaho work location.
~5 hrs
-
2
Apply the 5% volume credit rate
Idaho does not require a base-period calculation. Apply 5% directly to your total Idaho-located QRE for the taxable year. This volume approach is simpler than the federal incremental method and benefits companies with growing R&D spend.
~1 hrs
-
3
Complete Idaho Form 67 (Research Activities Credit)
File Form 67 with your Idaho income tax return. The form calculates the credit and tracks carryforward and carryback amounts. Attach to Form 41 (C-corporation), Form 40 (individual/sole prop), Form 65 (partnership), or Form 41S (S-corporation).
~2 hrs
-
4
Apply credit to Idaho income tax and track carryforward
The credit first offsets current-year Idaho income tax liability. If unused credit remains, you may carry it back to the 3 prior tax years (amend those returns) or carry it forward up to 14 years. Maintain a schedule of carryforward credits by vintage year as Idaho auditors track carryforward utilization.
~2 hrs
-
5
Retain supporting documentation
Keep Idaho-specific documentation: employee timesheets with Idaho project allocation, Idaho supply invoices, Idaho contractor research agreements. Idaho Tax Commission audits align with federal §41 documentation standards but also request Idaho-location evidence. Retain for at least 3 years after the return due date.
~3 hrs
Idaho's volume-based approach means there's no base-period calculation hurdle — every dollar of Idaho QRE earns the credit. The 14-year carryforward is among the longest of any state R&D credit, making it useful even for pre-profit startups.
Deadline & timing
Filed on Idaho Form 67 (Research Activities Credit) with the annual Idaho income tax return. Idaho corporate income tax returns due April 15 (or 15th day of 4th month after fiscal year end) with automatic 6-month extension available. Carryforward credit must be tracked on Form 67 for each year.
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Last reviewed 2026. GrantCompass is an independent funding-discovery tool and is not affiliated with any government agency. Always confirm details on the official program page.