Here are the biggest spending and tax cuts approved by the Utah Legislature this year

Utah lawmakers voted to cut $275 million from state programs and to return $123 million back to voters on Wednesday as part of an effort to make life more affordable by making government more efficient.

But lawmakers did not take significant steps to limit property tax increases, even though the issue was framed as a top priority by House Republican leadership to address cost-of-living concerns felt by constituents.

Despite initial fanfare, bills limiting local property tax rate increases, capping local property tax revenues and shifting property tax burdens failed to gain traction as lawmakers approved a package of income tax cuts.

At the start of the 2026 legislative session, Senate Tax chair Sen. Dan McCay framed the debate as “a battle of popular versus principle.” On Wednesday, McCay said the process had “won out” by shaping the best policies.

Income tax cut, child tax credit

For the sixth year in a row, the Republican-controlled Legislature prioritized a reduction to the individual income tax, dropping the rate by .05 percentage points to 4.45, which will cost the state $101 million.

The change will translate to roughly $40 in annual tax relief for a typical middle-class family. When combined with the previous five tax cuts, the cumulative tax relief could be closer to $400 every year for Utah families.

But the primary reason behind income tax cuts is remaining competitive amid a growing number of states which have eliminated the income tax, said McCay, R-Riverton, who sponsored the Senate version of the bill.

Utah has fallen out of the top 25 income tax rates, according to McCay, which could threaten the state’s 18-year streak as No. 1 in terms of economic outlook and its three-year streak as best state in the nation.

While a tight budget year did not leave much room for an income tax cut, it was important to send a signal that the state intends to continue a tax-friendly trajectory, Utah Taxpayers Association president Bill Hesterman said.

“It’s just part of that story that we’re gonna be able to tell,” Hesterman said. But, just as important, Hesterman said, is confirming that Utah is a “family friendly state” doing its part to “make it so families can succeed.”

On Wednesday, lawmakers also expanded tax credits for families with young children, costing the state $7.1 million in ongoing funds, and for businesses that provide employer-owned child care options, for $2.9 million.

HB290 will increase the number of working families with children under 6 who qualify for Utah’s Child Tax Credit by 12,000 to 20,000 additional families by raising the income eligibility threshold by $7,000.

HB190 will align Utah’s Employer Child Care Tax Credit with the federal One Big Beautiful Bill Act, to increase tax breaks to up to 80% of expenses made to provide an employer-owned child care facility, on- or off-site.

“We don’t just care about families in their middle term. We care about families at the very outset,” McCay said. “We have got to make sure that the next generation feels just as excited about the future of Utah as we are.”

Problems with property and gas tax

Before the session began, Utah House Speaker Mike Schultz presented these child tax credits as core to his initiative to help Utah families afford the American Dream, and to boost Utah’s struggling birth rate.

But he said the top issue his caucus had heard about from constituents was rising property taxes. No other topic came close, according to Rep. Jill Koford, R-Ogden, who made it her goal to work on property tax relief.

Over the past decade, a “perfect storm” of rising home values, inflated municipal costs and a poorly timed state-level pause on adjusting its rate led to property taxes surging by 100% to 235% in some counties in recent years.

While property taxes are controlled almost exclusively by cities, counties, school districts and other special taxing districts, Koford sought to tackle the problem by increasing the state’s primary residential exemption.

Koford’s bill, which never got heard in committee, would have let assessors exempt 60% of a home’s value from property taxes, instead of 45%, placing greater property taxes on commercial properties and second homes.

But her proposal simply did not have enough votes to go anywhere, Koford said. There was too much opposition from businesses, which made the point that higher rates would likely be passed onto consumers.

“This policy, I think, would have been a home run with the people,” Koford said. “But the question is, would they have just paid it somewhere else?”

One bill making public participation in local property taxes easier, HB236, and another cracking down on individuals with multiple primary residential exemptions, SB238, are both on track to pass this session.

The House’s other populist tax proposal, championed by Schultz, would have removed tax exemptions for the fuel oil companies send out of state. After pushback from industry and Idaho legislators, the policy was dropped.

But the final version of the bill, HB575, which would lower the gas tax from $0.38 per gallon to $0.32, sailed to a final vote on Wednesday, with unanimous committee support. It would cost the state roughly $12 million in revenue.

How will these cuts be paid for?

Federal tax cuts from the “Big, Beautiful Bill” limited Utah’s tax revenue and erased the budget surplus lawmakers had expected to work with this year. However, revenue estimates were revised upward by $213 million in February.

This news increased the number of bills that can be funded, but lawmakers had always intended to cut taxes as part of their mission to limit the size, and increase the efficiency of government, according to House Budget chair Val Peterson.

Mirroring their request to higher ed institutions last year, legislative leadership asked state agencies to identify 5% cuts. Appropriations committees ultimately cut budgets by 2.4%, or $275 million, to shift elsewhere.

These reductions removed some old or redundant programs to help pay for new policies, including the tax cuts. On Wednesday, lawmakers passed these supplementary spending changes, which totaled $1.15 billion.

Here are some of the biggest cuts:

• $18.3 million for a program that helped train teachers to use computers.
• $15.8 million for the Utah System of Higher Education if it increased enrollment by a certain metric.
• $10.6 million for software programs used by schools to promote early literacy.
• $7.4 million for a rural home revolving loan program Peterson said was not working well.

Here are some of the biggest expenditures:

• $130 million to expand the capacity of the Utah prison system.
• $50 million for a higher education research funding grant program.
• $35 million for the APEX Center workforce training program.
• $35 million to buy the Franklin Covey Campus in Salt Lake County.
• $25 million to increase automatic state funding for at-risk students.
• $18.6 million for a super computer to power cancer research at University of Utah Health.

Some of the state’s biggest new spending items, including $18 million in ongoing funds for homeless services, could also be partially funded by new taxes, targeting the biggest online companies and a variety of nicotine products.

HB337 would increase state revenues by $24.4 million by raising the tax on cigarettes from 8.5 cents to 15 cents, and applies a nicotine tax to moist snuff products based on the manufacturer’s sales price instead of product weight.

SB287 could increase revenues by more than $20 million by applying the state’s 4.7% sales tax to the money Google and Facebook make from targeted online advertising. If it passes, Utah would be only the second state to try this.

Both bills are awaiting final passage in the opposing chamber and have the support of legislative leadership. All other bills with a fiscal note will receive funding in the “Bill of Bills” which will come up for a vote late on Friday night.