Military Retirement Income Partial Deduction
Partial deduction of military retirement pay from Idaho state income tax (age- and disability-based limits; not a full exemption).
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Apply directly through the official Idaho agency.
About this benefit
Eligibility
Military retirees who meet Idaho's age or disability threshold — generally age 65+, or age 62+ with a qualifying disability. Must claim the deduction on Idaho Form 39R.
Covers
A partial deduction (not a full exemption) from Idaho state income tax. The annual deduction is capped at statutory amounts that are adjusted each year by the Idaho State Tax Commission; any amounts above the cap are offset by Social Security and similar retirement income. Survivor Benefit Plan (SBP) payments are treated the same way.
Tax rate
Idaho's flat income tax rate is 5.3% (HB 40, March 2025, retroactive to 2025 tax year and continuing for 2026), so each $1,000 of allowed deduction saves roughly $53/year.
How to apply
Claimed on Idaho state income tax return using Form 39R.
Verified against official source
Last checked 2026-05-06 against tax.idaho.gov. Always confirm current rates and rules with the Idaho state agency before applying.
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