For the last 16 years, Utah has been ranked #1 in Economic Outlook Rank by ALEC’s Rich States, Poor States, and while the future remains bright for Utah, 2024 threatens a new ranking for the first time ever.
In 2023, Utah cut its state individual income tax by 0.2%, from 4.85% to 4.65% – but starting January 1, 2024, twelve other states will also levy a reduced rate; the average reduction was 0.45% and the average new rate is 4.71%. In other words, we have fellow travelers on the road to low taxes, and it looks like they’re traveling faster, catching up, and will soon overtake us.
Notable tax changes throughout the country include:
| State | Change | 2023 ALEC Ranking |
| North Carolina | Reduced individual income tax rate from 4.75% to 4.5% | 2 |
| Indiana | Repealed income tax cut revenue triggers; instead, the state plans to accelerate its tax cuts, reaching 2.9% in 2027 | 7 |
| Georgia | Implemented a flat individual income tax rate of 5.49% | 12 |
| Ohio | Reduced individual income tax to 3.5% | 20 |
| South Carolina | Reduced individual income tax rate from 6.5% to 6.4% | 21 |
| Kentucky | Reduced individual income tax from 4.5% to 4% | 27 |
| Kansas | Reduced corporate income tax rate from 4% to 3.5% | 30 |
| Iowa | On a trajectory towards a 3.9% flat individual income tax rate by 2026 | 32 |
| Montana | Consolidated their tax brackets from seven to two with a top rate of 5.9% | 33 |
| Nebraska | Reduced several tax rates, and now have an individual income tax rate of 5.84%; they intend to reach 3.99% by 2027 | 36 |
Utah is competing with these states for employees, businesses, capital and investment. While our #1 ranking makes it look like we’re winning the race, the reality is that we sprinted ahead and we’re running out of steam. As 2024 and another General Session begin, let’s make sure we’re still running.
That might not look as simple as an income tax cut, but there is still opportunity to make progress. We have room to improve our state sales tax burden – ALEC currently ranks us 37th in this metric – by limiting the authorization of new tax increments at a city and county level. Utah has 490 full-time public employees per 10,000 people, making us 18th in the nation on this metric – the streamlining of departments and services and the elimination of non-essential programs could improve this variable. Utah ranks 15th in Property Tax Burden which costs Utahns $24.10 per $1,000 of income – our Truth in Taxation laws help to curtail property tax burden growth and must be upheld at every opportunity.
A new year and a new General Session mean a new opportunity for your Utah Taxpayers Association to work with legislators in shaping Utah’s tax policy and economic outlook. Let’s stay #1.
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