Back during the 2019 session, Utah’s Legislature set aside at least $75 million for a future tax cut. Since that time, there has been a failed tax reform proposal, disagreement on what the tax cut would look like in early 2020, and then COVID-19 hit.
With this history in mind, going into the 2021 session, legislative leaders were committed to a tax cut of at least $80 million, but that number ended up being closer to $100 million. Though there were proposals for a broad income tax rate cut, the Legislature settled on three targeted income tax cut proposals. They are as follows:
- House Bill 86, sponsored by Rep. Walt Brooks, which provides an $18 million state income tax cut for seniors whose adjusted gross income is made up mainly of social security benefits. They will no longer be taxed a second time on these benefits.
- Senate Bill 11, sponsored by Sen. Wayne Harper, eliminates state income taxes on military retirement benefits entirely, to the tune of $24 million.
- Senate Bill 153, sponsored by Sen. Lincoln Fillmore, restores a large part of the dependent exemption that was ended by default in the 2017 federal income tax cut. Utah partially restored it in 2018, and this bill adds another $55 million in cuts.
These tax changes will apply starting in the 2021 tax year.
Executive Vice President
Michael is the Executive Vice President, overseeing all of Libertas’ public policy efforts.