Utah residents pay income, property, and sales taxes, along with various fees, all of which impact their ability to save, invest, start businesses, and spend as they see fit. This legislative session saw several changes to tax policy, and below are the key measures we actively worked on or closely reviewed.
✅ State Income Tax Reduction
Utah’s legislature has consistently worked to lower the state income tax rate in recent years, with some even advocating for its complete elimination. The income tax rate has steadily declined, from 4.85% to 4.65% in 2023 and then to 4.55% last session.
This year, HB 106, sponsored by Rep. Christofferson and Sen. McCay, introduced a modest reduction, lowering the rate from 4.55% to 4.5%. As the bill made its way through the legislative process, it also had two provisions attached to it:
- A new nonrefundable income tax credit for businesses providing employee child care.
- An expansion of Utah’s child tax credit by raising the eligibility age from 5 to 6.
Our take: We welcome any step toward lowering the income tax burden on Utahns. However, we encourage future tax reductions to focus on broad, simple cuts rather than adding carve-outs that complicate the system and favor select groups.
✅ Social Security Tax Reductions
Utah is one of only nine U.S. states that tax Social Security benefits. However, Utah has a nonrefundable tax credit that ensures that those earning less than $45,000 (single filers) or $75,000 (married couples) do not pay state income tax on their benefits.
With the passage of SB 71, sponsored by Sen. Harper and Rep. Brooks, these income thresholds have increased. Now, single filers qualify for the credit up to $54,000, while joint filers qualify up to $90,000.
Our take: While a full repeal of state income tax on social security payments would be ideal, it’s understandable that budget constraints make such a move challenging, as it could limit other potential tax cuts.
✅ Making it More Difficult to Raise Taxes
SJR 2, sponsored by Sen. Fillmore and Rep. Kyle, requires a 60% supermajority vote from Utahns to pass any statewide initiative that creates a new tax, increases an existing tax rate, or expands an existing tax to cover additional items or transactions. Since this measure amends the state constitution, it will appear on the 2026 ballot for voter approval.
Our take: New taxes, especially those introduced through ballot initiatives, should require broad public support before being enacted. This higher threshold ensures taxpayers are protected from narrowly approved tax increases.
➖ Property Tax Changes
Utah’s current property tax system incentivizes local governments to never consider cutting property taxes because they fear the possibility of needing to later raise them due to an unforeseen circumstance. SB 295, sponsored by Sen. Fillmore and Rep. Kyle, makes adjustments to our truth-in-taxation process to account for this.
Specifically, the bill encourages local governments to lower property taxes by eliminating the requirement to undergo the truth-in-taxation process if, after cutting taxes, they later need to restore them back to their original level.
SB 197, sponsored by Sen. McCay and Rep. Kyle made further property tax changes, particularly for low-income seniors. It lowered the interest rate on property tax deferrals but phases out the homeowner’s credit, which provided direct relief to low-income, homeowning seniors. The bill also increased Utah’s renter’s credit, which helps low-income renters offset the property taxes paid indirectly through rent.
Our take: The truth-in-taxation reforms in SB 295 are a clear win. The phaseout of the homeowner’s credit in SB 197 has mixed consequences. On the one hand, the existence of the credit has resulted in all other taxpayers paying a higher tax. On the other, it removes an immediate tool for low-income, homeowning seniors to lower their tax burden. Without the existence of and improvements to the deferral program, we likely would have opposed the bill—not because we support subsidies, but because no one should risk losing their home over property taxes.
➖ Local Government Fees: The Hidden Tax Problem Remains
You know how most cell phone bills contain a list of fees that the company never advertised would be included? Some local governments do the same thing, by tacking extra charges on your water or electricity bill that have nothing to do with your water or electricity usage. Depending on where you live in Utah, you might be paying a “transportation utility fee”, “park fee”, “animal service fee”, “street sweeping fee”, “public safety fee”, “art and museum fee”, “streetlamp fee”, “open space fee”, and others.
This session, a compromise bill was introduced that would have banned two of these fees while requiring greater transparency for transportation utility fees. We remained neutral because it left too many fees untouched and failed to define what truly separates a fee from a tax. The bill ultimately failed, largely due to disagreements over whether tax-exempt entities should be required to pay. This suggests lawmakers still haven’t concluded whether or not these “fees” are just taxes by another name.
Our take: We have fought this “hidden tax” practice for years for a number of reasons, but have yet to convince cities to curb the practice. We suspect that some cities favor these fees because they can raise revenue without calling it a tax increase, allowing politicians to claim, “I didn’t raise your taxes” while still taking more from residents.
Looking Ahead
The 2025 legislative session brought both progress and setbacks for taxpayers. While taxes were reduced in some cases, and efforts to protect taxpayers from ballot-driven tax increases were forwarded, concerns remain on local government fees and our overall tax burden.
As we look toward future legislative sessions, we will continue advocating for tax relief, and plan to increase our efforts to increase tax transparency while moving toward a tax system that does the least damage possible.
