Bank Gap by State

The Bank Gap in Idaho

Idaho's flat 5.8% income tax applies to savings interest like any other income, though the state's still-below-average cost of living keeps the overall dollar stakes of the Bank Gap in check outside the fast-growing Boise metro.

Big-bank average0.38%

Best available4.40%

$1,005/yrlost on a $25k balance · 4.02 pp spread

Last reviewed August 7, 2026 · SwitchWize Research Desk

Best savings APY

4.40%

high-yield

National average

0.38%

big-bank avg

APY gap

4.02 pp

spread

ID tax on interest

5.80%

top marginal rate

Before ID tax

$1,005/yr

on a $25,000 balance

After ID 5.8% tax

$947/yr

recoverable by switching

On a $25,000 balance, the gap is about $1,005 a year before tax. After Idaho's 5.8% top income-tax rate on the additional interest, you keep about $947. Because Treasury interest is exempt from Idaho income tax, routing that cash through a state-tax-exempt Treasury vehicle can recover most of the difference.

Estimated Bank Gap by balance

Estimated annual Bank Gap by balance at 0.38% current APY versus 4.40% better-fit APY, before and after ID state income tax
Balance	Current earnings	Better-fit earnings	Estimated Bank Gap	After ID tax
$5,000	$19	$220	$201	$189
$10,000	$38	$440	$402	$379
$25,000	$95	$1,100	$1,005	$947
$50,000	$190	$2,200	$2,010	$1,893
$100,000	$380	$4,400	$4,020	$3,787

Estimates over 12 months at 0.38% current APY and 4.40% better-fit APY. The "After ID tax" column applies ID's 5.8% top income-tax rate to the additional interest; federal tax applies on top and is not shown. Example only — your result depends on your balance, rates, and time horizon.

Why Idaho changes the math

Idaho taxes interest income at a flat 5.8% rate. Treasury interest is exempt from that tax, giving higher-income Idaho savers a real, if moderate, after-tax edge from T-Bills or a government money market fund over a comparably priced taxable HYSA.

Living costs remain below the national average across most of Idaho, though the Boise metro has seen some of the fastest housing-cost growth in the country, gradually pushing typical emergency-fund targets up.

Cost of living in Idaho is below the national average, though rising in the Boise area, which shapes how large an emergency fund needs to be and therefore how many dollars the Bank Gap quietly costs on idle cash.

After-tax tip

Because Idaho taxes savings interest but not Treasury interest, the highest after-tax yield is not always the highest headline APY. Run your tax profile through the short-term savings tool to see whether a Treasury bill or government money market fund beats a taxable account for you.

Open the short-term savings tool

Frequently asked questions

Does Idaho tax high-yield savings account interest?

Yes. Idaho treats savings interest as taxable income, with a top rate of 5.8%. Interest from U.S. Treasury bills and the Treasury portion of a government money market fund is generally exempt from Idaho income tax, which can change the after-tax winner for higher earners.

Is a high-yield savings account worth it in Idaho?

Yes. Even after Idaho state tax, moving cash from a national-average account to a top high-yield savings account still leaves you with substantially more interest. The Bank Gap is far larger than the state-tax drag on the additional interest.

Are T-Bills better than a HYSA for Idaho savers?

They can be for higher earners. Because Treasury interest is exempt from Idaho income tax, a T-Bill or government money market fund can deliver a higher after-tax yield than a fully taxable savings account at a similar headline rate. The short-term savings calculator computes the breakeven for your exact tax situation.

Your personal Bank Gap

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Educational information, not tax or financial advice. State tax rules are summarized at a high level and depend on your full situation. Rates are illustrative of current market conditions and should be confirmed with the provider. Confirm tax treatment with a qualified professional.