Across the world, jurisdictions compete with each other to attract wealthy residents. Places like the Republic of Georgia and Paraguay have territorial tax systems where foreign-sourced income is not taxed. They do this because the world is a competitive place and people with options go where they’re treated best.
Utah is going to soon have the opportunity to benefit from an enormous wealth transfer, but only if the recipients deem the Beehive State to be a competitive option.
California homeowners aged 65 and older could pass down $3.4 trillion between 2026 and 2045, roughly 20 percent of the national transfer projected for older homeowners. An inheritance can change more than someone’s net worth. It can change where they can afford to live and whether they need to stay near a particular job. For wealthy heirs, that may mean choosing a more favorable tax jurisdiction. For working families, it may provide the resources to move somewhere where their money goes further or give them the requisite amount for a down payment on a home.
Utah’s natural beauty makes it an attractive destination. Its 4.45 percent income tax, on the other hand, is a harder sell. The rate may look modest compared to California and New York, but Nevada and Wyoming levy no personal income tax. A wealthy heir considering Salt Lake City can also consider Jackson Hole.
Taxes will not determine every single move, but they give prospective residents a reason to look elsewhere. When those residents choose another state, their spending and potential investment in local businesses go with them. When people bring their wealth to a state, their spending supports local enterprise and raises incomes. Those earnings, in turn, support further spending and investment, creating a positive feedback loop of economic growth.
In order to maximize its competitiveness, it would be ideal if Utah had no state income tax. The reality is that it would be difficult to completely abolish the income tax because of the fact that Utah earmarks income tax proceeds to go to education. Lawmakers should nevertheless continue lowering the rate and reconsider the treatment of investment income, which can be an important consideration for those with means.
The federal government taxes long-term capital gains and qualified dividends at preferential rates. In 2026, a married couple filing jointly whose taxable income consists entirely of qualified dividends can pay zero percent on up to $98,900. This is taxable income after deductions, not gross income.
Utah offers no comparable general preferential rate. For someone planning to live on an inherited investment portfolio, that difference matters. Reducing or eliminating state taxes on these dividends and gains would give prospective residents another reason to choose Utah.
Those of us already living here may accept the tax system as the cost of residency. Someone deciding where to move has no reason to accept that same tradeoff.
Utah need not compare itself to Paraguay to understand competition. Nevada is next door. California’s wealth transfer is an opportunity, but benefiting from it requires giving its recipients a reason to choose the Beehive State, and that means reforming our tax system.
