Most of what changes for a tradesperson in Idaho is set by the state, not Washington: how you get paid, whether you need to register, and what you owe in tax. Here is what actually differs, and where to run your own numbers.
Each section below points to a tool that runs your exact numbers for Idaho.
Tax in Idaho
Idaho has a flat 5.3% state income tax on top of your federal taxes. A flat rate makes the math simple: the same percentage applies whatever you earn. You still owe federal income tax and self-employment tax on your profit as well, and you make estimated payments to both the state and the IRS through the year.
On sales tax, Idaho follows the usual rule for the trades: your labor is not taxed, and you pay sales tax on your materials when you buy them rather than charging it to the customer.
Work out what to hold back on the Tax Set-Aside Calculator, which runs the federal and self-employment numbers for Idaho.
Getting paid: liens and retainage
A mechanic's lien is the tool that actually gets a Idaho contractor paid, and in Idaho you generally have to record it within 90 days of completion of your labor, services or materials. Miss it and you lose the lien, so the dates matter.
Enforcing it has its own clock. 6 months from the date the claim of lien was filed. Work out your dates on the Lien Deadline tool, and if they are close, get an attorney to confirm them against the statute (Idaho Code §§45-507(2), 45-510(1), 45-525(2)).
On money held back as retainage, here is where Idaho lands:
- Private work: 5% of each payment, and separately the contract price, with both tested at once.
- Public work: 5% of the total amount payable. 10% of the contract price, with payments capped at 90% of the proportionate value of work completed.
- Release: Private: 35 days (the statute does not say whether these are calendar or business days) from final completion of the work of improvement. Public: 30 days (the statute does not say whether these are calendar or business days) from the contracting public body and the contractor accept a portion of the project as complete.
- Prompt pay: Private: you must pass a subcontractor its share within 10 days of receiving retainage, unless there is a bona fide dispute. Public: 30 days after the subcontract is complete. On public work interest starts 30 calendar days after the work is completed, at the §63-3045 rate, compounding monthly.
Whether the rule covers your job at all is a separate question from the percentage. Private: the cap does not apply at all to owner-occupied residential work of 1 to 4 units, nor where the contractor or subcontractor fails to provide a performance bond that was requested. Public: the public body requires a performance or payment bond exceeding 50% of the total contract amount; in practice §54-1926(1)-(2) mandates bonds of at least 85% on contracts of $50,000 and up, so the cap bites on most public work.
Check the Retainage Calculator before you sign a contract that holds back more.
Free Idaho retainage letters
Three letters written for Idaho's rules, with the state's own release clock and its statutory citation already in them. Fill one in on screen and download it as a PDF or a Word file.
- Retainage Release Request (Idaho), for when the job is done and the money has not come back
- Retainage Overdue: Demand for Payment (Idaho), for when the release date has passed and nothing has arrived
- Retainage Held Above the Cap: Challenge Letter (Idaho), for when more is being held than the state appears to permit
Do you need a license in Idaho?
Idaho does not make you sit a full contractor license, but it does require you to register with the state before you work. Registration is lighter than a licensing exam, but skipping it can cost you: in a lot of states an unregistered contractor cannot even sue to get paid. The requirement: $2,000 or more. It is handled by Idaho Division of Occupational and Professional Licenses (DOPL).
Trade licenses for electrical, plumbing and HVAC are usually separate and often required even where a GC license is not. See what applies to your trade on the Contractor License Checker.
Building codes and permits
Idaho adopts its building codes statewide, so the rules travel with you across the state. Editions still move, so confirm yours with the building department before you price a job.
- Homes: 2018, Parts I, II, III and IX only (published as the Idaho Residential Code, 2020 Edition)
- Electrical: 2023 (adopted by statute at Idaho Code §54-1001, with Idaho amendments)
- Energy: 2018 (published as the Idaho Energy Conservation Code, 2020 Edition)
- Plumbing: 2015 UPC (published as the 2017 Idaho State Plumbing Code)
Idaho labels three of its four codes with a state edition year that runs ahead of the model code underneath, so build to the Idaho designation and expect the number on the cover to differ from the ICC or IAPMO year. The residential code is a partial adoption: only Parts I, II, III and IX of the IRC, with mechanical, fuel gas, plumbing, electrical and residential energy handled by the separate state codes instead. Electrical is unusual in the other direction: it is adopted by statute rather than by rule, and Idaho Code §54-1010 bars any city or county from setting electrical requirements that differ from the state's at all, so there is no local variation to check. Local enforcement generally is elective under §39-4116(1): a jurisdiction need not run a building-code program, and where it does not there is no permitting or inspection, though the state editions remain the floor for anyone who does enforce.
Source: Idaho Building Code Board, IDAPA 24.39.30.023 under Idaho Code §§39-4109 and 39-4109A (residential and energy); Idaho Code §54-1001 and IDAPA 24.39.10.600 (electrical); Idaho State Plumbing Board, IDAPA 24.39.20.600 under Idaho Code §54-2601 (plumbing). We have not yet read this row against Idaho's own adopting authority, so confirm the edition locally before you rely on it.
Check a specific job on the permit tool.
Pay and workers' comp
The minimum wage in Idaho is the federal $7.25 an hour. That is the floor for anyone you put on the books, and it is worth confirming against the state labor department each year because several states step their rate mid-year. Check a rate on the minimum-wage tool.
Workers' comp rates in Idaho are not published as a single figure; they turn on your trade's class code and your payroll. Get a realistic range on the Workers' Comp Estimator, then get a real quote.
If a client will not pay
If a client will not pay, you can sue for up to $5,000 in Idaho's Magistrate Division, Small Claims Dept. and lawyers are not allowed, which keeps it a level playing field. That covers most unpaid-invoice disputes for a small outfit; a bigger claim goes to regular civil court where you will probably want an attorney. Walk through whether filing is worth it on the Small Claims checker.
The clock runs the other way too: a client generally has 5 years to sue you over the work under a written contract in Idaho, and there is no absolute cutoff, so your exposure turns on when a defect is found. Work out your exposure on the Warranty & Claim Deadline tool.
Common questions
How much state income tax will I pay in Idaho?
Idaho has a flat 5.3% state income tax on your profit, on top of federal income tax and self-employment tax. Use the Tax Set-Aside Calculator to see what to hold back.
Do I need a contractor's license in Idaho?
Idaho does not require a full license but does require you to register with the state first. The requirement: $2,000 or more. Working unregistered can stop you suing to get paid.
What is the small claims limit in Idaho?
You can sue for up to $5,000 in Idaho's Magistrate Division, Small Claims Dept.. The filing fee is typically $40 to $70. Larger claims go to regular civil court.
How long do I have to file a mechanic's lien in Idaho?
Generally 90 days from completion of your labor, services or materials. Miss it and you lose the lien. Work your own dates out on the Lien Deadline tool.
How much retainage can be held back in Idaho?
Private: 5% of each payment, and separately the contract price, with both tested at once. Public: 5% of the total amount payable. Public, drainage districts: 10% of the contract price, with payments capped at 90% of the proportionate value of work completed. The condition on it, in the statute's own terms: Private: the cap does not apply at all to owner-occupied residential work of 1 to 4 units, nor where the contractor or subcontractor fails to provide a performance bond that was requested. Public: the public body requires a performance or payment bond exceeding 50% of the total contract amount; in practice §54-1926(1)-(2) mandates bonds of at least 85% on contracts of $50,000 and up, so the cap bites on most public work. Run your own figure on the Retainage Calculator.
Are there free Idaho contract and payment forms?
Yes. This page links 3 retainage letters written to Idaho's own release clock and carrying its statutory citation. They are free, there is no sign-up, and you fill one in on screen and download it as a PDF or a Word file.
What is the minimum wage in Idaho?
$7.25 an hour, the federal floor. Check a specific job on the minimum-wage tool.
The honest bit
These are the 2026 rules for Idaho as they stood when this guide was written, and they change: legislatures move thresholds, deadlines and rates every year. Treat this as general guidance to point you in the right direction, not legal, tax or financial advice. Verify anything you rely on at the source (the IRS, the Idaho tax and licensing agencies, and your local building department) or with a professional. Where Idaho does something unusual, the detail is called out above rather than glossed over.
Related: Tax Set-Aside Calculator · Mechanic's Lien Deadline · Contractor License Checker · Small Claims checker · Working in Your State
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Templates you might need
Sources
- Division of Occupational and Professional Licenses · Idaho contractor licensing authority. Who must hold a contractor or trade license in Idaho, and the licensing instrument (Idaho Code 54-5205(2)(f))
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