Our 2023 Beehive Report shows the tax burden of a typical Utah family. Here, we highlight some points of interest.
– Property tax for the Beehive Family increased by $168, from $3,515 in 2021 to $3,683 in 2022. This was not due to a rate increase in their case, but rather due to an increase in property value of almost $100,000. Many Utahns saw an increase in their 2022 property tax bill. This was due to three things: first, the statewide basic levy rate was frozen for the fifth and final year; second, residential property value increases that exceeded commercial property value increases; and third, the compounding effect of many entities (over 90 versus the typical 60) triggering Truth in Taxation to increase their budgets and hence increasing property tax rates.
– A reduction in the state income tax rate from 4.95% in 2021 to 4.85% in 2022. This resulted in the Beehive Family paying only $1 more in state income taxes despite a $2123 increase in their income. They paid an effective tax rate of just 3.51% due to the standard deduction and the personal exemptions permitted. For many Utahns who saw even a modest increase to their income, their state income tax burden did not increase much.
– Social Security and Medicare taxes continue to be the biggest burden on the Beehive Family, comprising 50% of their overall tax burden. Payroll/employer taxes comprise 19.1% of that amount. Although FICA rates have not increased since 1990, there is increasing uncertainty about the future of Social Security as the fund faces insolvency. Amongst other potential actions, the federal government could raise the rates on this expensive tax.
– The Federal Child Tax Credit was reduced from $3000 in 2021 to $2000 in 2022. The $3000 credit was implemented as a temporary emergency measure in response to the COVID pandemic. Although the federal government intends to make changes to the child tax credit, the 2022 $2000 credit is more reflective of normalcy.
It will be interesting to assess the impact of certain 2023 General Session policies in the 2024 Beehive Family Report.
– HB 54 reduced the income tax rate from 4.85% to 4.65%. This should prompt a reduction in the state income tax burden for many Utah families.
– HB 54 also permitted an additional exemption to be claimed for a child in the year of his or her birth. This will reduce the tax liability of Utah families who have a new baby in 2023.
– HB 170 introduced the Child Tax Credit which will give middle income families a child tax credit based on their income levels. This is estimated to impact 20,939 individuals in 2024.
– Assuming the passage of SJR 10, HB 54 would also remove the state sales tax on food beginning in 2025, meaning further changes will be seen in future reports.
Your Utah Taxpayers Association works to reduce the tax burden on Utah families for the benefit of all.