When speaking at the Utah Taxpayers Legislative Outlook Conference on January 11, 2021, Senate President Stuart Adams declared 2020 to be “the year of the tax cut” as he outlined the upcoming efforts on cutting taxes this legislative session. Legislative Leadership has set aside $80 million for tax cuts and there is ample one-time revenue that could also make its way into the conversation.
Right in line with those comments and at the very start of the legislative session, several bills have been introduced that, if passed, will reduce taxes in Utah. Your Taxpayers Association is supporting the vast majority of them and working hard to ensure their passage:
Tax Relief For Seniors and Military – Social Security and Military Retirement Benefit Tax Cut
Several bills have been introduced that will cut income taxes for social security recipients and those collecting military retirement benefits. House Bill 86 (Brooks) would be an $18 million income tax cut for seniors collecting social security and House Bill 161 (Pierucci) would eliminate state income tax on military retirement benefits.
Utah is one of only four states that fully taxes military retirement benefits. HB 161 would make those benefits tax free as it is in most other states.
While both bills work their way through the House, Senator Wayne Harper has introduced a similar bill (Senate Bill 11) that would also cut taxes in both of the same areas. As the session rolls on, we expect the Legislature to merge
Tax Relief For Families – Restoration of the Dependent Exemption
Ever since the passage of Federal Tax Reform in 2017, Utahn’s with dependents have seen a hike in their state income tax (while getting a reduction in their federal income tax) due to the elimination of the dependent exemption. That created a windfall in state revenue that was only driven by federal legislation. While a small percentage of that has been restored before, much more needs to be done to fully restore what was lost.
Senator Harper and Representative Jeff Moss have sponsored Senate Bill 100 that would go further down the road of restoring that exemption. That would be an approximate $40 million income tax cut for Utah families.
Senator Lincoln Fillmore has also introduced Senate Bill 153 that makes the same cut, but to a lesser extent to the tune of around $20 million.
Tax Relief for Small Businesses – Tangible Personal Property Tax Cut
Senator Wayne Harper has also introduced a bill that would provide meaningful tax relief for small businesses all across the state. Senate Bill 18 would raise the amount of business tangible personal property that is tax exempt from the current $15,000 level to $25,000 and would make it a tax cut so those taxes are not shifted to other property tax payers.
This tax relief exempts an additional 35,000 out of 85,000 businesses that pay this tax.
Your Taxpayers Association is also working to get the time period that businesses that are below the threshold must wait until they don’t have to file a personal property tax return shortened from the current five years and also restore the $500 exemption for incidental equipment that is not related to the business.
Property Tax Relief for Seniors – Optional Property Tax Deferral
Recipient of the “Taxpayer Advocate of the Year” award from your Utah Taxpayers Association for 2020, Senator Lincoln FIllmore has introduced Senate Bill 52, that would provide meaningful property tax relief for seniors that are in need. His bill gives homeowners who are over the age of 65 and have a home worth $500,000 or less the option to defer their property taxes.
Once a homeowner reaches age 75, they can request that the county defer their property taxes. Instead of paying each year, the homeowner has a lien placed on their home and the property taxes come due (with interest) whenever the home is sold or ownership is transferred. This option ensures deferred taxes are not shifted to other taxpayers.
In addition to all of these bills, your Utah Taxpayers Association continues to push for a much needed cut to the current 4.95% income tax rate. Utah has been stuck at virtually the same level for more than a decade and it is time to lower the rate and keep Utah where it needs to be.