85: Small Employer New Jobs Tax Credit and Instructions 2025 (2025)
Idaho · Idaho Tax Commission · Used for tax years 2025
Idaho Form 85 calculates the small employer new jobs tax credit earned or allowed for 2025. It reports qualifying new employees, credits earned or received, prior-year carryovers, and the credit allowed against Idaho income tax.
Who files this form
Use Form 85 to calculate the Idaho small employer new jobs tax credit earned or allowed. 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 with the Idaho Tax Commission certifying that you’ll meet these requirements 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 new employment increases beyond those 10 employees, pay the additional new employees average wages of at least $15.50 per hour worked.
For an employee to qualify for this credit, the employee must also meet the new-employee requirements, earn more than $24.04 per hour worked, and work at least nine months during the tax year in which you claim the credit. Only employees working primarily at the project site can be counted.
What you'll need
Use these forms and records to prepare your credit calculation, as applicable:
- Form 89SE: You must have filed this certification with the Tax Commission 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 employment records: Identify each qualifying new employee and the employee’s annual average salary.
- Your Idaho tax return and applicable credit forms: These provide the income tax and other credit amounts used to determine the limit.
- Your prior-year Form 85: Use it to determine any credit carryover.
- Form ID K-1: Relevant if you receive or distribute a pass-through credit.
- A unitary-sharing schedule: Include a schedule for credit received through unitary sharing. Corporations claiming the credit must provide calculations showing each combined-group member’s credit earned and used, shared credit, and carryovers.
- Form 85R: Include it if you have carryover eliminated due to recapture in 2025.
Common mistakes
- Claiming without certification: You can’t claim the credit if you haven’t filed Form 89SE or the Tax Commission has notified you that you don’t qualify.
- Claiming too early: If the project period began during the tax year and lasted 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.
- Not rounding down: The number of qualifying new employees must be at least one and must be rounded down to a whole number. The employee counts entered across lines 5a through 5d can’t exceed line 4.
- Sharing credit before using it: 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 employee level for five full years after the project period ends, or if you claimed the credit earlier and fail to meet the criteria certified on Form 89SE. File Form 85R when recapture is required.
Questions people ask
How much credit can a qualifying new employee generate?
The credit depends on the employee’s annual average hourly pay:
- More than $24.04 through $28.85: $1,500.
- More than $28.85 through $36.06: $2,000.
- More than $36.06 through $43.27: $2,500.
- More than $43.27: $3,000.
How is the increase in qualifying employees measured?
Subtract the greater of the preceding year’s average or the three preceding years’ average from the current year’s average number of qualifying employees. The result must be at least one and is rounded down to a whole number.
Is there a limit on the credit I can use?
Yes. The credit is limited to the smaller of 62.5% of your tax liability or your Idaho income tax remaining after the other credits that must be applied first. You also can’t claim more than your available credit.
Can I carry unused credit 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.