85R: Recapture of Idaho Small Employer New Jobs Tax Credit and Instructions 2025 (2025)
Idaho · Idaho Tax Commission · Used for tax years 2025
Form 85R calculates and reports recapture of the Idaho Small Employer New Jobs Tax Credit. It includes a five-year recapture worksheet and accounts for pass-through credit recapture, amounts distributed to owners or beneficiaries, and unused original credit.
Who files this form
You must report recapture of the Idaho small employer new jobs tax credit if either or both of these occurred:
- You didn’t meet the tax incentive criteria listed below.
- You didn’t maintain the level of qualifying employees for which you earned the credit for five full years after the project period ended.
The listed tax incentive criteria are:
- At least $500,000 in capital investment in new plant and building facilities.
- An employment increase of at least 10 new employees, each earning at least $19.23 per hour and receiving health benefits.
- For new employment increases above those 10 employees, average wages of at least $15.50 per hour worked for the additional new employees.
The form refers to instructions for who is included in the additional-employee wage calculation, but those instructions were not provided.
What you'll need
To complete Form 85R, have the following information available:
- Names as shown on your return and your Social Security number or EIN.
- Each year the credit was earned, the average number of qualifying employees for that year, and the credit amount earned.
- If you met the tax incentive criteria, the project period’s end date and the average number of qualifying employees working primarily within the project site for each year in the five-year recapture period.
- Any pass-through share of credit recapture from S corporations, partnerships, trusts, or estates.
- Any credit recapture distributed to shareholders, partners, or beneficiaries.
- The portion of the original credit not used to offset any tax.
The form directs you to report the final recapture amount on Form 44, Part II, line 5.
How to file
Complete the recapture calculation on Form 85R:
- Enter the credit year, average qualifying employee count, and credit earned in columns A through E, as applicable.
- If you didn’t meet the tax incentive criteria, enter 100% on line 4 and go to line 6.
- If you met the criteria, use the Recapture Worksheet. On line 5, enter the percentage for the earliest year in the recapture period when the average qualifying employee count fell below the count on line 2.
- Follow lines 6 through 12 to calculate the recapture, including pass-through amounts, distributed recapture, and unused original credit.
- Subtract line 12 from line 9. Enter the result on line 13 and on Form 44, Part II, line 5.
The provided form does not state a mailing address or give mail or e-file submission instructions.
Common mistakes
- Completing the worksheet when you didn’t meet the tax incentive criteria. The worksheet is only for those who met the criteria. Otherwise, enter 100% on line 4 and go to line 6.
- Using a later year’s recapture percentage. Line 5 requires the percentage for the earliest year when the average qualifying employee count fell below the count on line 2.
- Entering too much unused credit on line 11. Don’t enter more than line 9. The line 11 amount reduces the carryover available to the current year.
- Reducing the current year’s credit by the recapture amount. Don’t use line 13 to reduce the current year’s small employer new jobs tax credit computed on Form 85. Report it on Form 44, Part II, line 5 instead.
Questions people ask
How long must I maintain the qualifying employee level?
You must maintain the level for which you earned the credit for five full years after the end of the project period.
What recapture percentage applies if I didn’t meet the tax incentive criteria?
Enter 100% on line 4 and go to line 6.
What percentages does the Recapture Worksheet use?
For the five years after the project period ends, the percentages are 100% for the first year, 80% for the second, 60% for the third, 40% for the fourth, and 20% for the fifth. Use the percentage for the earliest year when the average qualifying employee count fell below the count on line 2.
What if some of the original credit was never used to offset tax?
Enter that portion on line 11, but no more than the amount on line 9. This reduces the carryover available to the current year.
Where do I report recapture passed through to me?
Enter your pass-through share of credit recapture from S corporations, partnerships, trusts, or estates on line 8.