2026 change: Under HB 559 (signed February 10, 2026, retroactive to January 1, 2025), amounts deducted or amortized under IRC § 174 or § 174A cannot also be used for the Idaho research credit. To claim the credit, a taxpayer must add back the federal research deduction for those expenses on its Idaho return.
At a glance
- Jurisdiction: Idaho (ID)
- Credit name: Credit for Idaho Research Activities (Idaho Code § 63-3029G).
- Administering agency: Idaho State Tax Commission.
- Rate(s) and base: 5% of Idaho qualified research expenses above the base amount (computed under IRC § 41(c) with Idaho-source gross receipts), plus 5% of basic research payments for basic research conducted in Idaho.
- Refundable? No.
- Transferable? No. Unitary group members may share unused credit; pass-through entities allocate credit to owners.
- Carryforward: 14 years. Oldest credits are used first.
- Annual cap / proration: No program cap. The credit plus carryforwards may not exceed tax due after other Idaho credits.
- Pre-approval / application and deadline: Not required. Claimed on the return.
- Forms: Form 67 (Credit for Idaho Research Activities), carried to Form 44 (Business Income Tax Credits and Credit Recapture), Part I, line 4; Form ID K-1 for pass-through shares.
- Sunset / recent changes: No sunset. HB 559 (2026) bars the credit for expenses deducted or amortized under § 174/174A and updates IRC conformity to January 1, 2026.
What it is
Idaho's research credit follows the federal § 41 framework for research conducted in Idaho. Since 2025, it works as an alternative to the federal research expense deduction for the same costs: a taxpayer can take the § 174A deduction or the Idaho credit on those expenses, but not both.
Who can claim it
Corporations, S corporations, partnerships, individuals, trusts and estates with qualified research expenses for research conducted in Idaho. Pass-through entities pass the credit through on Form ID K-1 (and must distribute certain amounts if they have elected affected business entity treatment).
How it is calculated
- Identify Idaho QREs (IRC § 41 definitions; research conducted in Idaho).
- Exclude any amounts that are deducted or amortized under § 174 or § 174A on the Idaho return (for taxable years beginning on or after January 1, 2025). To keep them in the credit, add back the deduction.
- Compute the base amount under § 41(c) using only Idaho-source gross receipts. Start-up company treatment may be elected and is irrevocable.
- Credit = 5% × (Idaho QREs − base) + 5% × basic research payments for Idaho basic research.
- Limit the credit (with carryforwards) to tax after other credits; carry the excess forward 14 years.
How to claim it
- Complete Form 67 and attach it to the Idaho return.
- Carry the allowed credit and the carryover to Form 44, Part I, line 4.
- Add back on the Idaho return any federal § 174/174A deduction for expenses used in the credit.
- Unitary groups attach a schedule showing credit shared among members.
Recent changes
- HB 559 (2026 Idaho Session Laws), signed February 10, 2026, retroactive to January 1, 2025:
- Idaho conforms to the IRC as in effect on January 1, 2026, including § 174A expensing for domestic research costs paid or incurred in 2025 and later.
- Amounts deducted or amortized under § 174 or § 174A are not eligible for the research credit.
- Domestic research costs from taxable years beginning 2022 through 2024 continue under prior (TCJA) rules; Idaho does not adopt the federal accelerated recovery or small business retroactive election for those years.
- The 2025 Form 67 reflects the add-back rule.
Likely examiner questions
These questions illustrate what an examiner may ask about this credit. They are drafts for illustration and should be reviewed by a specialist before use. Most state claims also face standard questions: where the research was physically performed, how wages, supplies and contract research were apportioned between Idaho and other locations, how Idaho amounts reconcile to federal Form 6765, the Idaho credit and carryforward schedule for each year claimed, and whether the claiming entity is the one subject to Idaho tax.
- Show that each activity was performed in Idaho.
- Show that the expenses used for the credit were added back and not deducted or amortized under § 174/174A on the Idaho return.
- Provide the base amount computation with Idaho-source gross receipts and the fixed-base percentage support.
- Reconcile Idaho QREs to federal Form 6765.
- Provide the carryforward schedule by year (14-year limit) and Form 44.
- For pass-through or unitary shared credit, provide the K-1s or the sharing schedule.
Common weak spots
- Claiming the credit and the § 174A deduction on the same expenses.
- Not modelling the deduction-versus-credit trade-off (5% credit versus the tax value of the deduction).
- Using total rather than Idaho-source gross receipts in the base.
- Out-of-state research included.
- 2022–2024 research costs recovered on the Idaho return under federal transition rules that Idaho did not adopt.
Next steps
- Run a mock audit for Idaho
- Official source: Idaho State Tax Commission, Form 67 (Credit for Idaho Research Activities) (opens in a new tab)
- Run the eligibility checker
- Book a scoping call with Swanson Reed (opens Swanson Reed's booking calendar in a new tab)
- Contact us: +1 (469) 206-4335 or hello@creditarmor.ai
Important
This page is general information, not tax advice. Rules change; confirm current requirements with the state revenue agency or a qualified tax professional. creditARMOR is a free service. Passing this mock audit does not guarantee that your claim will pass an IRS or state examination. If needed, Swanson Reed can assist you with representation before the IRS. creditARMOR and TaxTrex are products of Swanson Reed.