- The Utah Legislature cut income taxes by .05% and expanded the child tax credit to all children under 6.
- Lawmakers also removed the state tax on Social Security benefits for 90,000 senior Utahns.
- The $127 million in combined tax relief was prioritized by Gov. Spencer Cox and legislators in a tight budget year.
The Utah Legislature passed its tax cut package on Wednesday with a focus on young families and senior citizens.
Legislative leadership prioritized keeping their four-year streak of reducing income taxes while making room for Utah Gov. Spencer Cox’s requests to expand tax credits for children and Social Security beneficiaries.
The House concurred with Senate changes to HB106, Income Tax Revisions, on Wednesday, giving final approval to the bill which would:
- Decrease the corporate and income tax rates for all Utahns from 4.55% to 4.5%.
- Give businesses a 20% tax credit for creating new child care options for employees.
- Expand the child tax credit to include children who are 5 years old and under the age of 1.
The House also voted on Wednesday in favor of SB71, Social Security Tax Revisions, to expand the exemption for state income taxes on Social Security benefits for the fourth time since 2021, raising the income caps from $75,000 to $90,000 for a couple, and from $45,000 to $54,000 for individuals.
This change fell well short of Cox’s budget priority to completely eliminate Utah’s tax on Social Security income. But it is the most legislative leadership said they could give in a tight budget year, where $230 million set aside for tax cuts had to be tapped to fund other new spending.
“Thanks to Utah’s robust economy and our steadfast conservative policies, we’re putting money back where it belongs — with the people who earned it,” Senate President Stuart Adams, R-Layton, said.
What do Utahns think about the tax cuts?
A new Deseret News/Hinckley Institute of Politics poll conducted in late February by HarrisX among 805 registered Utah voters found that the most popular tax cut was to the state’s flat income tax rate.
When asked their opinion about four different potential tax cuts, 87% of Utah voters said they support reducing the income tax, 86% said they support reducing the sales tax on groceries, 81% said they support removing all taxes on Social Security and 75% said they support removing the income tax on Social Security benefits for recipients earning under $100,000 per year.
Over the last five years, the Legislature has approved roughly $1.4 billion in tax relief for Utahns. Cox and lawmakers have referred to this as the largest collective tax cut in Utah history.
“The cost of living continues to rise; by continuing to reduce the tax burden, we’re ensuring that Utah remains a place of opportunity and prosperity for generations to come,” House Speaker Mike Schultz, R-Hooper, said.
HB106, sponsored by Rep. Kay Christofferson, R-Lehi, will cost the state more than $103 million in annual tax revenue. SB71, sponsored by Sen. Wayne Harper, R-Taylorsville, will cost the state over $24 million in ongoing tax revenue.
Senate Minority Leader Luz Escamilla, D-Salt Lake City, supported expanding child tax credits but felt that inserting them in the income tax bill was unfair and put big business over budget needs.
“Combining them with an income tax cut is a coercive and unfair move that mirrors a Washington, D.C., style of political tactics,” Escamilla said. “This is a disservice to Utah’s working families.”
Escamilla and her caucus maintained throughout the session they would have preferred Cox’s proposal to join the 42 other states who do not tax Social Security, giving an average of $950 in tax relief to over 150,000 Utahns.
The Social Security tax credit expansion will impact roughly 90,000 Utahns, Harper said. The .05% reduction to the income tax rate will save a typical Utah family around $45 a year, according to the Utah Taxpayers Association.