The short answer
Idaho's state sales tax rate is 6%, and the use tax rate is also 6%. Almost every business selling taxable goods or services in Idaho needs a seller's permit, collects the tax, files a return on the schedule the Tax Commission assigns, and sends the tax in. In the books, sales tax you collect is money you owe the state, so it generally belongs in a liability account, not in income.
What Idaho sales tax covers
If you sell things to people in Idaho, you are probably collecting sales tax for the state. The Idaho State Tax Commission sets the state sales tax rate at 6%, and the use tax rate at 6% as well. Sales and use taxes apply to the sale of goods and certain services unless an exemption applies.
The Tax Commission's basics guide gives examples of taxable retail sales: selling, leasing or renting goods; digital books, music, videos or games with a permanent right to use them; short-term lodging of 30 days or less; meals and drinks; admissions to events; and production, fabrication or printing labor. Whether one specific item or service you sell is taxable is a question for the Tax Commission or your CPA, not a guess to make at the register.
One detail surprises many owners. The basics guide lists a service fee you charge a customer for paying by credit, debit or gift card as part of the taxable purchase price. If you add a card fee at checkout, the books and the register both need to treat it that way.
Who needs a seller's permit
The Tax Commission says almost every seller in Idaho needs a seller's permit. That includes individuals, businesses and nonprofits that make more than two sales in any 12-month period, sell to customers who will not resell the item, or publicly offer taxable products or services. Applying is free.
A regular seller's permit starts with the Idaho Business Registration process, the same application that sets up withholding and other state accounts if you hire. The Tax Commission warns that you could be fined for starting a business without applying for the permit. If you must open before it arrives, it says to keep a copy of your application, collect the correct tax, and send it in once your permit and returns arrive.
- Out-of-state sellers with more than $100,000 of sales into Idaho in any 12-month period need a permit (economic nexus).
- Marketplace-only sellers who sell only through registered marketplace facilitators generally do not need their own permit, because the marketplace collects and sends in the tax. You still verify that they report your sales.
- Small sellers: an Idaho resident selling as an individual or sole proprietor, with $5,000 or less in gross sales in the calendar year and no permanent place of business, may qualify for the small seller exemption.
| If this describes you | What Idaho generally expects | What the books need |
|---|---|---|
| You sell taxable goods or services from an Idaho location | A regular seller's permit, tax collected on sales, returns filed on the assigned schedule | Taxable and nontaxable sales split out; tax collected in Sales Tax Payable |
| You sell only through registered marketplace facilitators | The marketplace collects and sends in the tax; you verify it reports your sales | Marketplace payout reports kept; those sales left off your own return |
| You are outside Idaho and sell into the state | A permit once sales into Idaho pass $100,000 in any 12-month period | Sales by state tracked so you can watch the threshold |
| You buy goods for resale | Give the supplier Form ST-101 instead of paying tax | Inventory purchases recorded without tax; certificates on file |
| You buy for your own use and no Idaho tax is charged | Use tax at the 6% rate, reported on your sales tax return if you are a retailer | A use tax accrual or worksheet listing those purchases |
| You are an Idaho resident selling a little on the side | The small seller exemption may apply at $5,000 or less in gross sales a year | A running total of gross sales from every channel |
Sales tax is not your income
The money in the drawer looks like sales, but part of it already belongs to the state. In the books, the tax you collect generally goes to a liability account, often called Sales Tax Payable, at the moment of the sale. When you file and pay, the payment clears that liability. Recording collected tax as income inflates your sales, and then the payment to the state shows up as a large, confusing expense.
Timing matters too. The Tax Commission says Idaho sales tax is due on the accrual method: you send in the tax with the return for the period in which you made the sale, even if your customer has not paid you yet. A business that keeps its own books on a cash basis still needs a report of taxable sales by invoice date to fill in the return.
- Keep taxable and nontaxable sales in separate income lines or tracked separately, so the return can be filled in from the books.
- Record the tax collected to the liability account with each sale, not as a lump sum at month end.
- After each return, compare the Sales Tax Payable balance to what you filed. A balance that keeps drifting points to a coding error.
- Keep a copy of every return and payment confirmation with that month's records.
Filing schedules and due dates
With a regular seller's permit, the Tax Commission sets you up to file monthly, quarterly, semiannually or annually, based on how much you sell. It says most retailers file every month, with each month's tax due by the 20th of the following month. Retailers who owe less than $750 a quarter file quarterly, due within 20 days after the quarter ends. If a due date falls on a weekend or holiday, it moves to the next workday.
Returns are filed on Form 850 through the Tax Commission's online Taxpayer Access Point (TAP). You must file even in a period with no sales, and the Tax Commission says it will cancel a permit after 12 months in a row of zero-sales returns. Sales you make through registered marketplace facilitators that already report them are left off your return.
Your filing schedule sets the rhythm of your bookkeeping. A monthly filer needs the month's sales recorded and checked within a few weeks of month end; see how often to do bookkeeping for how that rhythm fits with payroll and other deadlines.
Use tax, resale certificates and local taxes
Use tax is the other half of the system. You generally owe Idaho use tax when you buy taxable goods to use in the business and the seller did not charge Idaho sales tax, such as some online or out-of-state purchases, or when you take items out of inventory for your own use. Retailers report use tax on their regular sales tax return. The Tax Commission notes that many businesses keep a use tax accrual account for this, and that businesses with a use tax permit keep these records at least four years, while those without one keep them at least seven.
When you buy goods to resell, you give the supplier Form ST-101, Sales Tax Resale or Exemption Certificate. The form's instructions say the seller must keep the valid certificate on file and is responsible for the tax if it is not valid. If customers buy from you for resale, keep their certificates with your sales records.
Local taxes are limited. The Tax Commission lists resort cities that add a local sales tax, such as McCall and Sun Valley; Boise, Meridian, Nampa, Kuna, Eagle, Caldwell and Star are not on that list today. Short-term lodging is different: it carries the travel and convention tax, and lodging inside an auditorium district, such as the Greater Boise or Nampa district, carries that district's tax too.
Who files, and what the books should hand them
The return itself is filed by the business owner or whoever the owner hires for it, such as a CPA. The bookkeeping job is to make that filing easy: taxable sales, nontaxable sales and tax collected that match the return, a liability account that clears after each payment, and use tax recorded as purchases happen. Card and app sales add a wrinkle, because deposits arrive net of fees; payment processor payouts and Form 1099-K shows how to record them.
Setting up sales tax correctly in QuickBooks, with the right rates and liability accounts, is part of a new QuickBooks setup. Keeping it reconciled every month belongs to ordinary small business bookkeeping. Danielson Bookkeeping does not file sales tax returns or give tax advice; questions about what is taxable go to the Tax Commission or your CPA. Retailers can also see bookkeeping for retail shops.
