Idaho Idaho Small Employer New Jobs Tax Credit

Idaho Small Employer New Jobs Tax Credit
Form 85, Small Employer New Jobs Tax Credit and Instructions 2023
Form 85
Small Employer New Jobs Tax Credit
Names as shown on return

2023
Social Security number or EIN

Qualifying for the Credit
You can claim the small employer new jobs tax credit if you’ve certified on Form 89SE that you’ll meet all the following tax
incentive criteria at the project site during the project period:
•	 Capital investment in new plant and building facilities of at least $500,000
•	 Increased employment by at least 10 new employees, each earning at least $19.23 per hour and receiving health
benefits
•	 For new employment increases above the 10 new employees, the average wages of the additional new employees
are at least $15.50 per hour worked. See instructions for who’s included in this calculation.
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, you don’t qualify for this credit.
Credit Available Subject to Limitation
1. The average number of qualifying employees during the tax year ............................................
2. The average number of qualifying employees during the three
preceding tax years .................................................................................

2

3. The average number of qualifying employees during the
preceding tax year ...................................................................................

3

4. Subtract the greater of line 2 or 3 from line 1 and enter the difference. This is
the number of qualifying new employees. The amount must equal or exceed one ...................

1

4

5. Number of qualifying new employees listed on line 4 whose annual
salary during the tax year the credit was earned was:
a. greater than $24.04 per hour worked but equal to or less than an
average rate of $28.85 per hour worked ............................................ 5a
b. greater than an average rate of $28.85 per hour worked but equal
to or less than an average rate of $36.06 per hour worked ............... 5b
c. greater than an average rate of $36.06 per hour worked but equal
to or less than an average rate of $43.27 per hour worked ............... 5c
d. greater than an average rate of $43.27 per hour worked .................. 5d
$1,500 Credit
6. Multiply the number on line 5a by $1,500 ................................................................................... 6
$2,000 Credit
7. Multiply the number on line 5b by $2,000 ................................................................................... 7
$2,500 Credit
8. Multiply the number on line 5c by $2,500 ................................................................................... 8
$3,000 Credit
9. Multiply the number on line 5d by $3,000 ................................................................................... 9
10. Add lines 6 through 9. This is your total small employer new jobs tax credit
earned this tax year .................................................................................................................... 10
11. Pass-through share of credit from an S corporation, partnership, trust, or estate ...................... 11
12. Credit received through unitary sharing. Include a schedule ............................................................. 12
13. Carryover of small employer new jobs tax credit from prior years .............................................. 13
14. Carryover eliminated due to recapture in 2023. Enter the amount from
Form 85R, line 11. Include Form 85R ......................................................................................... 14
15. Credit distributed to shareholders, partners, or beneficiaries ..................................................... 15
16. Credit shared with unitary affiliates ............................................................................................. 16
17. Total credit available subject to limitations. Add lines 10 through 13,
then subtract lines 14 through 16 ............................................................................................... 17
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Form 85

2023

(continued)

18. Enter the Idaho income tax from your tax return ........................................................................ 18
19. Credit for income tax paid to other states ................................................ 19
20. Credit for contributions to Idaho educational entities .............................. 20
21. Investment tax credit from Form 49, Part II, line 9 .................................. 21
22. Credit for contributions to Idaho youth and rehabilitation facilities .......... 22
23. Credit for production equipment using post-consumer waste ................. 23
24. Promoter-sponsored event credit ............................................................ 24
25. Credit for Idaho research activities from Form 67, line 29 ....................... 25
26. Broadband equipment investment credit from Form 68, line 18 .............. 26
27. Reserved ................................................................................................. 27
28. Small employer investment tax credit from Form 83, line 28 .................. 28
29. Small employer real property improvement tax credit from
Form 84, line 26 ...................................................................................... 29
30. Add lines 19 through 29 .............................................................................................................. 30
31. Tax available after other credits. Subtract line 30 from line 18 ........................................................... 31
32. Multiply line 18 by 62.5% ............................................................................................................ 32
33. Total credit allowed on current year tax return. Enter the smaller amount from
lines 17, 31 or 32 here and on Form 44, Part I, line 8 ................................................................ 33
Credit Carryover
34. Total credit available subject to limitations. Enter the amount from line 17 ................................ 34
35. Credit allowed. Enter the amount from line 33 ........................................................................... 35
36. Credit carryover to future years. Subtract line 35 from line 34. Enter the amount
here and on Form 44, Part I, line 8 ............................................................................................. 36

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Form 85 — Instructions
Small Employer New Jobs Tax Credit
General Instructions

2023

•	 The average number of qualifying employees for
the preceding tax year

Use Form 85 to calculate the Idaho small employer
new jobs tax credit (SE-NJTC) earned or allowed.
Each member of a unitary group of corporations
that earns or is allowed the credit must complete a
separate Form 85.

The number of qualifying new employees must be
rounded down to the nearest whole number.

If the project period began during this tax year and
didn’t cover a period of at least nine months, you
don’t qualify for the SE-NJTC this year.

To determine the credit allowed, each qualifying new
employee must be identified based on their annual
salary as shown in the following table.

Qualifying Taxpayers

Carryover Periods

To qualify for the SE-NJTC, you must certify by
filing Form 89SE that you’ll meet the tax incentive
criteria at the project site during the project period.
If you haven’t filed Form 89SE with the Tax
Commission or you’ve been notified that you don’t
qualify for the small employer incentives, you can’t
claim this credit.

The SE-NJTC earned but not used against tax may
be carried forward for 10 tax years. For purposes of
the carryover period, a short tax year counts as one
tax year.

Credit Rates

If the annual
salary is greater
than...

But equal to or
less than an
average rate of...

Then the credit
earned is...

Qualifying New Employees for the SE-NJTC

$24.04 per hour

$28.85 per hour

$1,500

To qualify for the credit, the new employee must:
•	 Qualify as a new employee for purposes of the
small employer tax incentive criteria discussed
above
•	 Earn more than $24.04 per hour worked and
•	 Have worked a minimum of nine months during
the tax year in which the credit is claimed

An average rate of
$28.85 per hour

$36.06 per hour

$2,000

An average rate of
$36.06 per hour

$43.27 per hour

$2,500

Calculating the Credit
Use the Employer Quarterly Unemployment
Insurance Tax Reports and the Unemployment
Insurance Wage Reports filed with the Idaho
Department of Labor to compute the number of
employees. Only those employees who meet
the definition of “new employee” can be included
when computing the SE-NJTC. Don’t include any
employees who don’t work primarily at the project
site. Keep records to support the computations.
The number of employees employed primarily at
the project site during a tax year is the average of
the number of employees reported to the Idaho
Department of Labor during the 12 months of the
tax year. If the project period began during the
tax year, the number of employees for the year is
the average number actually employed during the
months of the project period. You can’t earn the
credit if the project period didn’t cover at least nine
months during the first tax year. These employees
may qualify for the credit the next year.
The number of qualifying new employees is the
increase in the number of qualifying employees for
the current tax year over the greater of the following:
•	 The average number of qualifying employees
for the three preceding tax years or
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An average rate of
$43.27 per hour

$3,000

Recapture
Compute recapture if you don’t maintain the required
level of qualified new employees for five full years from
the date the project period ends.
Also, compute recapture if you claimed the SE-NJTC
in an earlier year and don’t meet the tax incentive
criteria you certified to on Idaho Form 89SE.
If you claimed the SE-NJTC and recapture is now
required, file Form 85R.

Specific Instructions

Instructions are for lines not fully explained on the form.
Credit Available Subject to Limitation
Line 1. Determine the average number of qualifying
employees during the tax year by adding the number
of qualifying employees reported for each month
on your Idaho Employer Quarterly Unemployment
Insurance Tax Reports and dividing that amount by
the number of months of operation during the tax year.
Don’t include any employees who weren’t employed
primarily at the project site.
Line 2. Determine the average number of qualifying
employees during the three preceding tax years by
dividing the total of the average number of qualifying
employees reported on your Idaho Employer
Quarterly Unemployment Insurance Tax Reports for
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Form 85 — Instructions

2023

(continued)

each preceding year by three. If the project period
existed less than three tax years, use the number of
tax years in operation.

member of the combined group. The schedule must
clearly identify shared credit and the computation of
any credit carryovers.

Line 3. Determine the average number of qualifying
employees during the preceding tax year by adding
the number of qualifying employees reported for
each month on your Idaho Employer Quarterly
Unemployment Insurance Tax Reports and dividing
that amount by the number of months of operation
during the preceding tax year. Enter zero if the
project period covered less than nine months the
preceding tax year.

Credit Limitations

Line 4. No credit is allowed unless the number on
this line equals or exceeds one. If it’s more than
one, the number is rounded down to the nearest
whole number.
Line 5. To compute lines 5a through 5d, identify
each individual who’s a qualifying new employee
and the annual average salary that the individual
earned during the tax year. Enter the number of
qualifying new employees according to their annual
salary earned for the tax year. The amounts listed
on lines 5a through 5d can’t exceed the number on
line 4.
Line 11. Enter the amount of the SE-NJTC
that’s being passed through by S corporations,
partnerships, trusts, or estates in which you have
an interest. Report this amount on Form ID K-1,
Part VII, line 44 or Form ID K-1, Part XI, line 68
(Composite/ABE).

The SE-NJTC is limited to the smaller of 62.5% of
the tax liability or the Idaho income tax after allowing
all other tax credits that may be claimed before the
SE-NJTC.
The following credits must be applied to the tax before
the SE-NJTC:
1.	 Credit for income tax paid to other states
2.	 Credit for contributions to Idaho educational
entities
3.	 Investment tax credit
4.	 Credit for contributions to Idaho youth and
rehabilitation facilities
5.	 Credit for production equipment using
post-consumer waste
6.	 Promoter-sponsored event credit
7.	 Credit for Idaho research activities
8.	 Broadband equipment investment credit
9.	 Small employer investment tax credit
10.	 Small employer real property improvement tax
credit
Line 18. Enter the amount of your Idaho income tax.
This is the computed tax before adding the permanent
building fund tax or any other taxes or subtracting any
credits.

Line 12. If you’re a member of a unitary group,
enter the amount of credit you received from
another member of the unitary group.

Line 19. Enter the credit for income tax paid to other
states from Forms 39R, 39NR, or 66. This credit is
available only to individuals, trusts or estates.

Line 13. Enter the carryover from your 2022
Form 85, line 36.

Line 33. Enter the smallest amount from lines 17, 31,
or 32 on line 33. Enter this amount on Form 44, Part I,
line 8 in the Credit Allowed column.

Line 15. If you’re an S corporation, partnership,
trust, or estate, enter the amount of credit that
passed through to shareholders, partners, or
beneficiaries.
Line 16. If you’re a member of a unitary group,
enter the amount of credit you earned that you elect
to share with other members of your unitary group.
Before you can share your credit, you must use
the credit up to the allowable limitation of the tax
liability.
Corporations claiming the SE-NJTC must provide
a calculation of the credit earned and used by each

If you’re an S corporation or partnership and you’ve
elected to be an ABE, this amount also needs to be
distributed to the shareholders or partners on their
Form ID K-1.
Credit Carryover
Line 36. The amount of credit available that exceeds
the total credit allowed on the current year tax return
may be carried forward up to 10 tax years. Enter this
amount on Form 44, Part I, line 8 in the Carryover
column.

Contact us:

In the Boise area: (208) 334-7660 | Toll free: (800) 972-7660
Hearing impaired (TDD) (800) 377-3529
tax.idaho.gov/contact
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