85: Small Employer New Jobs Tax Credit and Instructions 2024 (2024)
Idaho · Idaho Tax Commission · Used for tax years 2024
Idaho Form 85 calculates the small employer new jobs tax credit earned and allowed for 2024. It reports qualifying new employees, credits based on their wages, credits received or distributed, and credit carryovers.
Who files this form
Use Form 85 to calculate the Idaho small employer new jobs tax credit earned or allowed for 2024. Each member of a unitary group of corporations that earns or is allowed the credit must complete a separate Form 85.
To qualify, you must have filed Form 89SE certifying that you’ll meet these criteria at the project site during the project period:
- Invest at least $500,000 in new plant and building facilities.
- Increase employment by at least 10 new employees, each earning at least $19.23 per hour and receiving health benefits.
- For employment increases above those 10 employees, pay the additional new employees average wages of at least $15.50 per hour worked.
You can’t claim the credit if you haven’t filed Form 89SE with the Tax Commission or have been notified that you don’t qualify for the small employer incentives.
Employees counted for this credit must qualify as new employees, earn more than $24.04 per hour worked, and have worked at least nine months during the tax year the credit is claimed. Employees who don’t work primarily at the project site can’t be included.
What you'll need
Have these forms and records available:
- Form 89SE: You must have filed this certification to qualify.
- Idaho Employer Quarterly Unemployment Insurance Tax Reports and Unemployment Insurance Wage Reports: Use reports filed with the Idaho Department of Labor to calculate employee counts. Keep records supporting your calculations.
- Employee wage and work records: You’ll need to identify qualifying new employees and their annual average salaries.
- Your Idaho income tax return and applicable credit forms: Form 85 uses your Idaho income tax and credits that must be applied before this credit.
- Your 2023 Form 85, if claiming a carryover: The instructions direct you to use line 36 for the prior-year carryover.
Additional attachments may apply:
- Include Form 85R if a carryover is eliminated because of recapture in 2024.
- Include a schedule for credit received through unitary sharing. Corporations claiming the credit must provide a calculation of credit earned and used by each combined-group member, clearly identifying shared credit and carryovers.
Common mistakes
- Claiming the credit too early: If the project period began during the tax year and covered less than nine months, you don’t qualify for the credit that year. Those employees may qualify the next year.
- Counting ineligible employees: Don’t include employees who fail the new-employee requirements or don’t work primarily at the project site.
- Rounding employee counts up: The qualifying new-employee count must be rounded down to a whole number. No credit is allowed unless line 4 is at least one.
- Overstating the wage-category counts: The employee counts on lines 5a through 5d can’t exceed the qualifying new-employee count on line 4.
- Sharing credit before using your own allowable amount: Before sharing credit with unitary affiliates, you must use it up to the allowable tax-liability limit.
- Overlooking recapture: Compute recapture if you don’t maintain the required level of qualified new employees for five full years after the project period ends, or if you fail to meet the criteria certified on Form 89SE after claiming the credit. File Form 85R when recapture is required.
Questions people ask
How much credit can each qualifying new employee generate?
The credit depends on the employee’s annual salary expressed as an hourly rate:
- More than $24.04 through $28.85 per hour: $1,500.
- More than $28.85 through $36.06 per hour: $2,000.
- More than $36.06 through $43.27 per hour: $2,500.
- More than $43.27 per hour: $3,000.
How is the number of qualifying new employees calculated?
Subtract the greater of the prior-year average qualifying employee count or the average for the three preceding tax years from the current-year average. Round the result down to a whole number. The result must be at least one to claim a credit.
Is there a limit on the credit I can use?
Yes. The credit is limited to the smaller of 62.5% of the tax liability or the Idaho income tax remaining after credits that must be applied before this credit. The amount claimed also can’t exceed the credit available.
Can unused credit be carried forward?
Yes. Credit earned but not used against tax may be carried forward for 10 tax years. A short tax year counts as one tax year.
Can I receive this credit from a pass-through entity?
Yes. Form 85 includes a line for credit passed through from an S corporation, partnership, trust, or estate in which you have an interest. The instructions identify Form ID K-1, Part VII, line 44, or Part XI, line 68 for Composite/ABE reporting.