Business law firm can help you understand all tax credits and deductions
Top business law firm in Boise and Nampa ID can help your business remain tax compliant. If you are a business owner in Idaho, you may be wondering how to reduce your tax burden and keep more of your hard-earned profits. Here are some strategies you can use to lower your effective tax rate and save money.
Use Deductions and Credits
Idaho taxes income, sales, and corporate profits at different rates, depending on the income level and filing status. The income tax rates range from 1.00 percent to 6.00 percent, the sales tax rate is 6.00 percent statewide, and the corporate tax rate is 6.00 percent. However, you can reduce your taxable income by taking advantage of the tax deductions and credits that Idaho offers. For example:
- You can deduct a standard amount from your taxable income based on your filing status and number of dependents
- You can claim a child tax credit of $205 per dependent child under 17 years old
- You can claim a grocery tax credit of $100 per person if you are an Idaho resident for the entire year
These deductions and credits can lower your tax bill and increase your net income.
Plan Your Income and Expenses Carefully
If you are a part-year resident or nonresident who receives income from an Idaho source, you must pay taxes on that income in Idaho. However, you can also deduct any expenses related to that income, such as travel costs, supplies, or rent. You can also allocate your income and expenses between Idaho and other states based on the time you spent in each state. This can help you avoid double taxation and minimize your overall tax liability.
Choose the Right Business Structure
Depending on the type and size of your business, you may benefit from forming a corporation, a partnership, a limited liability company (LLC), or a sole proprietorship. Each of these entities has different tax implications and requirements in Idaho. For example:
- Corporations are subject to the 6.00 percent corporate tax rate on their net income, but they can also deduct certain expenses and losses from their taxable income
- Partnerships and LLCs are not taxed at the entity level, but they must file an informational return and pass through their income and losses to their owners or members
- Sole proprietorships are the simplest form of business, but they also expose the owner to unlimited personal liability for the business debts and obligations
You should consult with a tax professional to determine which business structure best suits your goals and situation.
Explore Incentives and Grants
Idaho also offers various incentives and grants for qualifying businesses that can help you save money and grow your business. Some of these include:
- The Tax Reimbursement Incentive (TRI), which is a performance-based incentive featuring a tax credit of up to 30% for up to 15 years on new state tax revenues generated by companies seeking to expand in or relocate to Idaho by adding new, qualifying jobs
- The Data Center Sales Tax Exemption, which allows new data centers choosing to locate in Idaho to be eligible for sales tax exemption on server equipment as well as construction materials used in the construction of the data center facility
- The Idaho College Savings Program Employer Tax Credit, which gives employers a 20% tax credit for contributions made to an employee’s IDeal college savings account, capped at $500 per employee, per taxable year
- The Idaho Opportunity Fund, which provides funds for public infrastructure improvements to a new or existing facility, awarded at the discretion of the Director of Idaho Commerce
- The Idaho Semiconductors for America Act, which provides qualifying Idaho semiconductor companies with a sales and use tax exemption on the purchase of qualifying construction and building materials
- The Idaho Business Advantage, which offers a wide package of incentives, including tax credits, sales tax rebates, and property tax exemptions, for businesses that invest at least $500,000 in new facilities and create at least 10 jobs paying at least $40,000 a year with benefits
- The Property Tax Exemption, which allows businesses investing at least $500,000 in new or existing non-retail, commercial or industrial facilities, to qualify for a full or partial property tax exemption for up to five years, depending on the county
You can also apply for grants that can help you fund research, market access, infrastructure, and more. You should check with the Idaho Department of Commerce and other sources to see what incentives and grants are available and suitable for your business.
Consult with a Tax Professional
As a business owner in Idaho, you should also be aware of the business laws and regulations that apply to your industry and operations. Tax laws are complex and change regularly, so you should always consult with a tax professional before making any decisions or taking any actions that may affect your taxes. These laws can affect various aspects of your business, such as contracts, litigation, intellectual property, employment, and more. A professional can help you comply with the tax laws and rules in Idaho and advise you on the best ways to optimize your tax situation.
Consult with a business lawyer who can advise you on the legal issues and risks that may arise in your business and help you draft and review contracts, agreements, and other documents. By following these strategies, you can reduce your tax burden and maximize your profits as a business owner in Idaho.
Work with the top business law firm in Boise and Nampa ID
Jacobson & Jacobson Law Firm, since 1982, is committed to serving the Boise and Nampa, Idaho areas for your top Criminal Defense, Personal Injury, Business Law, Estate Planning, Family Law, Immigration Law, and Litigation needs. Contact us today to get started. For a free 30-minute consultation, book here: https://calendly.com/jfj-1