Idaho State Tax Commission

Idaho State Tax Commission

Guidelines for Income Earned on Reservations by American Indians

The 2013 Idaho Legislature adopted House Concurrent Resolution 32 (HCR 32), which did not renew Idaho Income Tax Administrative Rule 033, subsections 03, 04, and 05 (IDAPA 35.01.01.033). With this change, the Legislature has rejected major portions of Rule 033 that had the apparent effect of limiting the exemption for certain income earned by American Indians on Idaho reservations.

With these legislative changes, the following income is subject to Idaho tax:

  • Income earned outside a federally recognized Indian reservation
  • Income earned within a federally recognized Indian reservation by an individual who is not an enrolled member
  • Income earned on a reservation by an enrolled member who lives off the reservation

Taxpayers should file 2012 tax returns using the guidelines below:

If you're an enrolled member of a federally recognized tribe and live and work on an Idaho reservation, all income earned on the reservation is exempt from Idaho taxation.

Exempt income should be subtracted on Idaho Form 39R, Line 17, for Idaho residents or Idaho Form 39NR, Line 13, for Idaho part-year residents and nonresidents if the income is included in federal adjusted gross income (Form 40, line 7) or the front of Form 43.

If a 2012 return has been filed that includes income from an enrolled member living and working on an Idaho reservation, an amended return must be filed to remove the income and process any refund that may be due.

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Last updated April 10, 2013